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Climate change and "growth traps"
[Климатические Изменения И «Ловушки Роста»]

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  • Golub, Alexander (Голуб, Александр)

    (The Russian Presidential Academy of National Economy and Public Administration)

Abstract

Reliance of the Russian economy on carbon dependent sectors may induce a long-term stagnation and convergence of the economy into the development trap. A theoretical model of economic growth model presents the Russian economy as a combination of two sectors: dominating carbon-dependent industries and emerging knowledge-based sectors. Exposure of carbon-dependent industries to the emerging global and regional climate policies and to climate change itself determine elevated investment risks and high risk-adjusted cost of capital. The reliance of Russia on resource and energy-intensive sectors will increase investment risks and the cost of capital for the Russian economy. For the theoretical analysis, we apply the Ramsey economic growth model with a convex-concave production function. For the analysis of investment risks, we use the real options analysis.

Suggested Citation

  • Golub, Alexander (Голуб, Александр), 2020. "Climate change and "growth traps" [Климатические Изменения И «Ловушки Роста»]," Working Papers 032002, Russian Presidential Academy of National Economy and Public Administration.
    • Handle: RePEc:rnp:wpaper:032002
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    Keywords

    development trap; investment risks; climate policy: concave-convex production function;
    All these keywords.

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