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Samuel Kortum Publications

Journal of Monetary Economics
Abstract

This paper concerns technology escaping from the United States and how much we should be concerned about it. This topic appears frequently in news articles, with the presumption that we should be very concerned. Since technology is non rival, maybe we shouldn’t be too concerned. Even after it’s escaped, we still have it. But, given security concerns, maybe we should be concerned about some of these technologies escaping. I applaud the authors for bringing rigorous analysis to this contentious issue.

Environmental and Energy Policy and the Economy
Abstract

Climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. When climate policies vary across countries, energy-intensive industries have an incentive to relocate to places with few or no emissions restrictions, an effect known as leakage. Relocated industries would continue to pollute but would be operating in a less desirable location. We consider solutions to the leakage problem in a simple setting where one region of the world imposes a climate policy and the rest of the world is passive. We solve the model analytically and also calibrate and simulate the model. Our model and analysis imply: (1) optimal climate policies tax both the supply of fossil fuels and the demand for fossil fuels; (2) on the demand side, absent administrative costs, optimal policies would tax both the use of fossil fuels in domestic production and the domestic consumption of goods created with fossil fuels, but with the tax rate on production lower due to leakage; (3) taxing only production (on the demand side), however, would be substantially simpler and almost as effective as taxing both production and consumption, because it would avoid the need for border adjustments on imports of goods; and (4) the effectiveness of the latter strategy depends on a low foreign elasticity of energy supply, which means that forming a taxing coalition to ensure a low foreign elasticity of energy supply can act as a substitute for border adjustments on goods.

World Trade Evolution
Abstract

This chapter examines basic features of services trade and asks how well current modeling strategies capture the features. It then proposes and quantifies extensions to a basic structural gravity model that incorporate these features. The extended model allows people to handle goods trade and services trade in an encompassing framework. The chapter presents some basic facts about services trade and some quantitative implications of the model. Tangible goods are sold in country n at a markup over the cost of the inputs used to produce them. A result of the competition is that the low-cost producer of a variety serves the market and its price equals either the cost of the second lowest-cost potential supplier of that variety to market n or the monopoly price, whichever is lower. Ultimately, the value of intangible services will flow in the form of royalties to the country whose intangible sector generated the intangible assets.