On June, 1st, 2017, US president Donald Trump announced that his country would withdraw from the Paris Climate Accord and on July, 8th, the Turkish president Recep Tayyip Erdoğan declared that his country would probably not ratify the agreement either. The paper investigates the growth consequences of being an insider or an outsider of a global climate agreement in the framework of a Romer-type model of directed technical change with international technological spillovers. The paper shows that there is a critical mass of member countries that makes a climate agreement stable and by which parameters it is influenced. Moreover, some surprising results on the effects of subsidies for green technologies are derived.

This seminar has been jointly organized by FEEM and IEFE, Bocconi University.