Per Capita Income, International Trade Puzzles, and CO2 Emissions
Justin Caron and Thibault Fally
After estimating preferences and productivity across sectors and countries, we find that the cross-country differences in per capita income and their implication for consumption baskets can shed light on trade patterns and explain why there is not as much trade as we might expect from standard trade models. We also find an important role for per capita income and consumption patterns in explaining cross-country differences in CO2 emissions.
Trade, non-homothetic preferences, income, missing trade, CO2 emissions, international trade
Justin Caron and Thibault Fally. 2015. "Per Capita Income, International Trade Puzzles, and CO2 Emissions." ARE Update 18(3): 1-4. University of California Giannini Foundation of Agricultural Economics.