Are firms adapting to climate change? This paper studies this question by combining geocoded World Bank Enterprise Survey data with spatially granular weather data to estimate temperature response functions for nearly 160,000 firms in 134 countries over a 15-year period. Our results show that...

The conference of the Italian Regional Science Association (AISRe), held in September 2022 in Milan, provided a great opportunity to reflect on the local responses to the important challenges that European territories are facing. This book collects a series of contribution that were presented...

As the impacts of climate change are expected to be increasingly disruptive, a growing share of the economic literature moved to modelling approaches to address the interconnectedness of social, economic, and environmental issues. Among them, System Dynamics (SD) stands out as a well-established...

This paper reformulates the New Keynesian model to incorporate output adjustments through the extensive margin. Shifting from adjustments through the intensive to the extensive employment margin, the model introduces predetermined output, altering key properties of the New Keynesian framework....

Many behavioral responses to climate change are carbon-intensive, raising concerns that adaptation may cause additional warming. The sign and magnitude of this feedback depend on how increased emissions from cooling balance against reduced emissions from heating across space and time. We present...

This working paper was written by Yin-wong Cheung (University of California, Santa Cruz), Kon S. Lai (California State University, Los Angeles) and Michael Bergman (Lund University).The conventional view, as expounded by sticky-price models, is that price adjustment determines the PPP reversion...

This working paper was written by Yin-wong Cheung (University of California, Santa Cruz) and Kon S. Lai (California State University, Los Angeles).This study investigates whether greater nominal exchange rate flexibility aids real exchange rate adjustment based on data from dual exchange rates...

Compared to existing needs adaptation policies are lagging behind significantly. Most environmental economists would argue that adaptation measures such as flood protection have the feature of a local public good, and since benefits accrue to later generations also, the public goods issue is the...

Several Phillips curves based on sticky information and sticky prices are estimated and compared using Bayesian VAR-GMM. This method derives expectations in each Phillips curve from a VAR and estimates the Phillips curve parameters and the VAR coefficients simultaneously. Quasi-marginal...

During the global response to COVID-19, the analogy of fighting a war was often used. In 2022, the world faced a different war altogether, an unprovoked Russian invasion of Ukraine. Since 2020 the world has faced these unprecedented shocks. Although we realise these events' health and economic...

This chapter proposes a portfolio choice model that describes investors’ adaptation to climate change as a temporal process, in which investors’ perception of climate hazards shapes their preferences and decisions over the duration of their financial portfolios. Investors tend to revise,...

Adaptation to climate change is an integral part of sustainable development and a necessity for advanced and developing economies alike. How can adaptation be planned for and mainstreamed into fiscal policy? Setting up inclusive coordination mechanisms and strengthening legal foundations to...

With respect to climate change, the principal focus of both research and public policy has been on mitigation – on reducing greenhouse gas emissions so as to reduce anticipated adverse effects. But it is increasingly clear that adaptation must also be a high priority. Climate-related risks –...

Eine quantitativ-qualitative Studie über ukrainische Geflüchtete in Deutschland, die im Mai und Juni 2022 mit 936 Befragten einer Online/Offline-Umfrage und 17 qualitativen Befragten durchgeführt wurde, ermöglicht es, die soziodemografischen Merkmale von Ukrainischen Geflüchteten zu...

Mounting costs of anthropogenic climate change reveal that adaptation will be essential to human well-being in coming decades. At the same time, the literature on the economics of adaptation offers relatively little guidance for emerging policy. In this chapter, we review the existing...

Infrastructure has been essential in supporting the Philippines’ rapidly growing economy. Yet, infrastructure assets and operations are significantly exposed to climate-related risks. Building climate resilience into infrastructure planning and financing is therefore a strategic priority for...

We survey the microeconomics literature that studies how firms in the developing world are adapting to extreme weather, local pollution, and natural disasters. Climate change increases the uncertainty that every firm must address as it decides where and how to produce and who to trade with. We...

We need to develop a better understanding of how to generate effective strategic adaptation in times of abrupt environmental changes. The global interdependencies across specialized economic functions and markets require that business activities co-evolve across interacting public-private...

We determine empirically how the Big Three automakers accommodate shocks to demand. They have the capability to change prices, alter labor inputs through temporary layoffs and overtime, or adjust inventories. These adjustments are interrelated, non-convex, and dynamic in nature. Combining weekly...

The purchasing power parity puzzle relates to the adjustment of real exchange rates. Real exchange rates are extremely volatile, suggesting that temporary shocks emanate from the monetary sector. But the half-life of real exchange rate deviations is extremely large -- 2.5 to 5 years. This...

We study strategic interactions between firms with heterogeneous beliefs about future climate impacts. To that end, we propose a Cournot-type equilibrium model where firms choose mitigation efforts and production quantities such as to maximize the expected profits under their subjective beliefs....

This paper examines a model of dynamic price adjustment based on the assumption that information disseminates slowly throughout the population. Compared to the commonly used sticky-price model, this sticky-information model displays three, related properties that are more consistent with...

A pervasive problem in the literature on the health costs of pollution is that optimizing individuals may compensate for increases in pollution by reducing their exposure to protect their health. This implies that estimates of the health effects of pollution may vastly understate the full...

Agents forming adaptive expectations generally make systematic mistakes. This characterization has fostered the rejection of adaptive expectations in macroeconomics. Experimental evidence, however, shows that in complex environments human subjects frequently rely on adaptive heuristics –...

Drawing on social capital theory, this study explores how two types of guanxi – with business partners and with government officials – affect corporate capabilities differently, and examines their contingent value. The results from a survey of 409 firms in China indicate that the two guanxi...

Economic models of climate policy (or policies to combat other environmental problems) typically neglect psychological adaptation to changing life circumstances. People may adapt or become more sensitive, to different degrees, to a deteriorated environment. The present paper addresses these...

We develop a simple model of managing a system subject to pollution damage under risk of an abrupt and random jump in the damage coefficient. The model allows the full dynamic characterization of the optimal emission policies under uncertainty. The results, that imply prudent behavior due to...

This paper presents a simple model of state-dependent pricing that allows identification of the relative importance of the degree of price rigidity that is inherent to the price setting mechanism (intrinsic) and that which is due to the price's driving variables (extrinsic). Using two data sets...

This study investigates whether greater nominal exchange rate flexibility aids real exchange rate adjustment based on data from dual exchange rates in developing countries. Specifically, we analyze whether the more flexible parallel market rate produces faster real exchange rate adjustment than...

There is very little empirical evidence on the effects of the minimum wage on prices in the international literature and none whatsoever for developing countries. This paper estimates the minimum wage price effect using monthly Brazilian household and firm data from 1982 to 2000 aggregated at a...

The relationship between training and firm-level employment adjustment given an unanticipated fall in product demand has been central to human capital theory. The most cataclysmic negative output shock occurred in 1929/30. At this time, easily the most important source of United Kingdom general...

The conventional view, as expounded by sticky-price models, is that price adjustment determines the PPP reversion rate. This study examines the mechanism by which PPP deviations are corrected. Nominal exchange rate adjustment, not price adjustment, is shown to be the key engine governing the...