Cross-border Transmission of Climate Policies Through Global Production Networks
Marius Fourné
IWH Discussion Papers,
No. 19,
2025
Abstract
Climate policies do not operate in isolation but propagate through global production networks, affecting industries beyond national borders. This paper combines international input-output data with a granular instrumental variable approach to capture how foreign regulations transmit through upstream and downstream linkages. Distinguishing between market-based policies, non-market regulations, and technology support, the analysis shows that foreign climate policies can enhance domestic productivity, with effects shaped by industry characteristics and operating through technological adjustment along supply chains. The results underscore the importance of accounting for international spillovers when evaluating the economic impact of environmental regulation.
Read article
Road to Net Zero: Carbon Policy and Redistributional Dynamics in the Green Transition
Alessandro Sardone
IWH Discussion Papers,
No. 16,
2025
Abstract
This paper examines the macroeconomic and distributional effects of the European Union’s transition to Net Zero emissions through a gradually increasing carbon tax. I develop a New Keynesian Environmental DSGE model with two household types and distinct energy and non-energy sectors. Five alternative uses of carbon tax revenues are considered: equal transfers to households, targeted transfers to Hand-to-Mouth households, subsidies to green energy firms, and reductions in labor and capital income taxes. In the absence of technological progress, the carbon tax policy induces a persistent increase in energy prices and a reduction in GDP, investment, and consumption. Headline inflation falls below zero in the medium run, reflecting weaker aggregate demand. Distributional outcomes vary significantly depending on the implemented revenue recycling scheme: targeted transfers are the most progressive but entail larger macroeconomic costs, while subsidies and tax cuts mitigate output and investment losses but are less effective in narrowing the consumption gap. A limited foresight scenario, in which agents learn about policy targets sequentially, generates more volatile adjustment paths and temporary inflationary spikes around announcements, but long-run outcomes remain close to the baseline.
Read article
15th Annual IWH-CompNet Conference
15th Annual IWH-CompNet Conference 22-23 October 2026 - Brussels, Belgium Center for Business and Productivity Dynamics – CompNet, the Halle Institute for Economic Research, and…
See page
9th vintage
9th Vintage CompNet Dataset The CompNet dataset includes a set of micro-aggregated indicators to enhance policy and academic analysis on competitiveness and productivity. All the…
See page
Research Articles
Research Articles Explore cutting-edge research based on CompNet’s micro-aggregated firm-level data and related analytical tools. These articles cover empirical and theoretical…
See page
Research Clusters
Three Research Clusters Each IWH research group is assigned to a topic-oriented research cluster. The clusters are not separate organisational units, but rather bundle the…
See page
14th CompNet Annual Conference
14th CompNet Annual Conference 25-26 September, 2025 in Vilnius, Lithuania Programme Highlights – 14th CompNet Annual Conference, Vilnius, 25–26 September 2025 The conference…
See page
Alumni
IWH Alumni The IWH maintains contact with its former employees worldwide. We involve our alumni in our work and keep them informed, for example, with a newsletter. We also plan…
See page
10th Vintage
The CompNet 10th Vintage Dataset 10th Vintage dataset is now available! The CompNet dataset provides a comprehensive set of micro-aggregated indicators, specifically designed to…
See page
Job Market Candidates
Job Market Candidates Marius Fourné Marius Fourné is a PhD candidate in Economics at the Halle Institute for Economic Research (IWH) and Martin Luther University of…
See page
