Is Free Trade Bad for Resources?
Jevan Cherniwchan and M. Scott Taylor
Paris School of Economics, 10 December 2018
University of Hawaii, 15 February 2019
SVG Basel, 30 April 2019
ETH Zürich, 8 May 2019
This paper develops a theoretical and empirical framework for assessing the impact of international trade on natural resource stocks and country welfare. Both harvesting decisions and the decision to convert habitat to alternative uses are linked to world prices, government enforcement power, and resource characteristics. We develop a simple estimating equation from our theory that allows us to examine whether liberalized trade at higher world prices strengthens resource management practices providing gains, or whether new entrants attracted by higher rents overwhelm the regulatory ability of resource managers producing losses. Our empirical application studies deforestation in Indonesia to provide a proof of principle evaluation.
Malthus meets Domesday: Food, Fuel, and the Spatial Economy
Juan Moreno-Cruz and M. Scott Taylor
University of Cambridge, 13 December 2018
This paper develops a spatially explicit model of energy use and agglomeration where transport costs for energy are key to determining the size and location of economic activity. By introducing the concept of uniform landscape, we are able to fully characterize the model’s predicted number of agglomerations, their size, and the overall population density within administrative units. We evaluate the model’s predictions using the Domesday census of 1086 and GIS techniques.
M. Scott Taylor
NBER Working Paper No. 24855, issued in July 2018
All empirical researchers know that having more sources of variation in a dataset is valuable. What is not known is how valuable, and if the marginal value of adding another source of variation diminishes or increases. This note provides explicit answers to these questions. It defines "valuable" as the number of independent questions the data can potentially answer, and provides a surprisingly simple and useful rule that tells the researcher not only when they have "emptied the tank" of their data's valuable implications, but also the marginal value of further data collection. An illustration using home heating costs is provided.
Escape from Malthus: Limitless Growth in a Limited World
Sjak Smulders and M. Scott Taylor
This paper review the literature on economic growth and the environment and is written for a non-specialist audience. It begins with a discussion of the Malthusian theory of stagnation to highlight why stagnation occurs, and then turns to examine how subsequent authors have relaxed these constraints to generate alternative outcomes. The paper stresses that key assumptions on replicability, substitution, and accumulation determine the likelihood of long run sustainable growth.
Pollution and Trade in a Small Open Melitz Economy
B. Copeland and M. Scott Taylor
Stanford University, 28 February 2017
This paper combines a simple Melitz-style model of a small open economy with the pollution and abatement model of Copeland and Taylor, to investigate the pollution and welfare consequences of trade liberalization. We find marginal reductions in exporting or importing trade barriers lower pollution levels, and raise real incomes, and welfare; a discrete movement from autarky to trade lowers pollution levels and is likewise welfare enhancing. Similar real income enhancing changes in autarky, such as factor growth, have no effect on pollution emissions. We explain how these results follow from adjustments at the firm level in their techniques of production, firm numbers, and the mix of exporting and domestic firms created by the interaction of international trade and endogenous pollution policy. The model we develop is very tractable and could be used to examine a host of issues, both theoretical and empirical, concerning the effect of international trade on the environment.
B. Copeland and M. Scott Taylor
Canadian Journal of Economics, Forthcoming
This paper gives a brief overview of contributions to environmental and resource economics in Canada. We concentrate on work from the past 25 years, but we also highlight earlier pathbreaking work. Canadians have made fundamental contributions to many aspects of the field, especially in resource economics, non-market valuation, and international environmental economics. Our focus is on academic work by scholars in Canada,1 but we put this in the context of the development of the field internationally. Given space constraints, we cannot be comprehensive and so the review discusses big picture trends, along with a selective overview of leading contributions. We also had to limit the scope of the article and so do not cover energy economics and mainly consider fisheries when discussing renewable resource economics.
This paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources affects the distribution of economic activity across geographic space. By combining elements from energy economics and economic geography we link the productivity of energy resources to the incentives for economic activity to agglomerate. We find a novel scaling law links the productivity of energy resources to population sizes, while rivers and roads effectively magnify productivity. We show how our theory's predictions concerning a single core, aggregate to predictions over regional landscapes and city size distributions at the country level.
J. Cherniwchan, B. Copeland, and M. Scott Taylor
The Annual Review of Economics, Vol. 9, March 2017, 59-85.
We review recent research linking international trade to the environment, with a focus on new results and methods. The review is given structure by a novel decomposition linking changes in emissions to changes in productive activity at the plant, firm, industry, and national levels. Although some new results have emerged from the application of a Melitz-style approach to trade and the environment, the full potential of this approach has not yet been realized.We discuss existing empirical and theoretical work, introduce three new hypotheses, and suggest paths for future researchers to follow.
Comments on the "The Main Contribution of the Ricardian Trade Theory" by Ronald W. Jones.
M. Scott Taylor
Appearing as Chapter 7 in 200 Years of Ricardian Trade Theory: The Challenges of Globalization, edited by R. Weder and R. Jones. Springer, forthcoming 2017.
These are comments on the link between Ricardian trade theory circa 1960 and its new incarnation in the 2000s reflected in the work of Eaton and Kortum. I argue that the two-good, two-country, model had three serious problems limiting its application, and then ask how the profession has tried to solve these problems over time. It discusses a limiting many country, many good efficiency result due to Jones 1961; discusses three of the most cited applications of the continuum model introduced by Dornbusch, Fischer and Samuelson 1977; and concludes with thoughts for the future and exclusions from the analysis. The comments are an almost verbatim translation of the comments I gave in Basel in May of 2017.
Recent and upcoming talks, seminars, & conference attendance
May 8, 2019: Research Seminar, ETH Zürich, Zürich, Switzerland. Presenting “Is Free Trade Bad for Resources”.
April 30, 2019: Research Seminar, Statistisch-Volkswirtschaftliche Gesellschaft (SVG), Basel, Switzerland. Presenting “Is Free Trade Bad for Resources”.
February 11-15, 2019: Departmental Seminar, University of Hawaii, Honolulu, USA. Presenting “Is Free Trade Bad for Resources”.
December 12-13, 2018: The New Malthusianism: A Symposium, Cambridge, UK.
December 10, 2018: Trade and Environment Seminar, Paris School of Economics, Paris, France.
November 26, 2018: Statistisch-Volkswirtschaftliche Gesellschaft (SVG), Basel, Switzerland.
July 8-13, 2018: NBER Summer Institute: International Trade and Investment Workshop, Cambridge, USA.
April 21-May 21, 2018: University of Basel, Basel, Switzerland. The Basel Lectures: Trade. Resources, and Sustainability.
March 15-18, 2018: NBER Trade and Geography Conference, Cambridge, USA.
February 19-March 3, 2018: Sao Paulo School of Economics, Sao Paulo, Brazil. Six Lectures on International Trade, Resource Use and the Environment. Lecture 1 slides.
July 15, 2017: National Bureau of Economic Research Environment and Energy Economics Meeting, Cambridge, USA.
May 12, 2017: Scientific Conference - Celebrating 200 Years of Ricardian Trade Theory, University of Basel, Basel, Switzerland.
February 28, 2017: Public and Environmental Economics Workshop, Stanford University, Stanford, USA.
March 31, 2017: Seminar, Ohio State University, Columbus, USA.
November 22, 2016: Economics Seminar, Tilburg School of Economics and Management, Tilburg University, Tilburg, The Netherlands.
April 25-29, 2016: Basel Seminar, University of Basel, Basel, Switzerland.
April 11, 2016: Department of Economics, Iowa State University, Ames, USA.
October 23, 2015: Back to the Future of Green Powered Economies, BUEC Seminar, University of Alberta, Edmonton, Canada.
June 24-27,2015: 21st Annual EAERE Conference, Helsinki, Finland
June 3, 2015: The Beginning of the End of the Fossil Fuel Era? Keynote Address, AERE Summer Conference, San Diego, USA.
April 22, 2015: Food, Fuel and the Spatial Economy, The Graduate Institute, Geneva, Switzerland.
April 18 - May 2, 2015: Lectures in Trade, Growth and the Environment, University of Basel, Basel, Switzerland.
March 13, 2015: Back to the Future of Green Powered Economies, The Bank of Mexico, Mexico City, Mexico.