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International trade literature tends to focus heavily on the production side of general equilibrium, leaving us with a number of empirical puzzles. There is, for example, considerably less world trade than predicted by Heckscher-Ohlin-Vanek (HOV) models. Trade among rich countries is higher and trade between rich and poor countries lower than suggested by HOV and other supply-driven theories, and trade-to-GDP ratios are higher in rich countries. Our approach focuses on the relationship between characteristics of goods and services in production and characteristics of preferences. In particular, we find a strong and significant positive correlation of more than 45% between a good's skilledlabor intensity and its income elasticity, even when accounting for trade costs and cross-country price differences. Exploring the implications of this correlation for empirical trade puzzles, we find that it can reduce HOV's overprediction of the variance of the net factor content of trade relative to that in the data by about 60%. Since rich countries are relatively skilled-labor abundant, they are relatively specialized in consuming the same goods and services that they are specialized in producing, and so trade more with one another than with poor countries. We also find a positive sector-level correlation between income elasticity and a sector's tradability, which helps explain the higher trade-to-GDP ratios in high-income relative to low-income countries.

Using a multi-regional input-output (MRIO) framework, we estimate the direct and indirect carbon dioxide ([CO.sub.2]) content of consumption across regions of the United States. We improve on existing estimates by accounting for emissions attributable to domestically and internationally imported goods using data describing bilateral trade between U.S. states and with international countries and regions. This paper presents two major findings. First, attributing emissions to states on a consumption basis leads to very different state-level emissions responsibilities than when attributed on a production basis; for example, California's emissions are over 25 percent higher. Second, heterogeneity of emissions across trading partners significantly affects the indirect emissions intensity of consumption (kg of carbon per $ of consumption), so regional differences in intensity across the U.S. go well beyond direct energy consumption. These findings have implications for evaluating the distributional impacts of national climate policies and for understanding differing incentives to implement state-level policies. Keywords: [CO.sub.2] emissions, Emissions accounting, [CO.sub.2] content of consumption, Carbon tax incidence, Indirect emissions, Embodied emissions, United States https://doi.org/10.5547/01956574.38.1.jcar, 1. INTRODUCTION An extensive literature attempts to trace the full effect of consumption patterns on carbon dioxide ([CO.sub.2]) emissions throughout the economy. There are many motivations for such studies, including [...]

With federal policies to curb carbon emissions stagnating in the U.S., California is taking action alone. Sub-national policies can lead to high rates of emissions leakage to other regions as state-level economies are closely connected, including integration of electricity markets. Using a calibrated general equilibrium model, we estimate that California's cap-and-trade program without restrictions on imported electricity increases out-of-state emissions by 45% of the domestic reduction. When imported electricity is included in the cap and 'resource shuffling' is banned, as set out in California's legislation, emissions reductions in electricity exporting states partially offset leakage elsewhere and overall leakage is 9%. Keywords: Climate policy, Cap-and-trade, California, Electricity imports, Resource shuffling, Computable general equilibrium, State-level climate policy, Border effect, 1. INTRODUCTION Leakage occurs when greenhouse gas (GHG) restrictions in some regions increase emissions elsewhere. Climate policies can cause leakage via their impacts on trade, fossil fuel prices and factor [...]