2013b). On the spatial economic impact of global warming

We propose a dynamic spatial theory to analyze the geographic impact of climate change. Agricultural and manufacturing firms locate on a hemisphere. Trade across locations is costly; firms innovate; and technology diffuses over space. Energy used in production leads to emissions that contribute to the global stock of carbon in the atmosphere, which affects temperature. The rise in temperature differs across latitudes, and its effect on productivity also varies across sectors. We calibrate the model to analyze how climate change affects the spatial distribution of economic activity, trade, migration, growth, and welfare. We assess quantitatively the impact of migration and trade restrictions, energy taxes, and innovation subsidies. ∗We would like to thank David Nagy for excellent research assistance, Joseph Gomes and David Lobell for their help with data, and Larry Karp and Daisuke Oyama for helpful comments. This study is conducted as a part of the Project "Theory and Empirics of Urban Growth and Spatial Structure " undertaken at Research Institute of Economy, Trade and Industr