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This paper investigates the benefits of banks' direct investment in foreign subsidiaries and branches for non-financial multinationals. The paper builds on the literature on international banks which has primarily focused on the implications for host countries, rather than for its international clients, and on the literature on foreign direct investment (FDI), which emphasizes significant costs of investment. Using a new detailed data set of non-stationary sector-level outward FDI, this paper finds that the volume of FDI by home market banks boosts FDI by non-financial firms from the same home market. Domestic and third-country foreign banking provide imperfect substitutes, especially in countries that are corrupt or have weak rule of law. The result rests on banks' FDI in local branches and subsidiaries rather than cross-border lending. These findings are consistent with a role for home market multinational banks in intermediating information asymmetry in opaque foreign markets. The sale of a major international bank to third-country counter parties during the recent crisis may thus result in persistently lower volumes of outward FDI from the bank's home market. -- outward sector-level FDI ; banks ; asymmetric information ; panel non-stationarity

Most people are convinced that climate change is a threat and that it should somehow be dealt with. It is also clear that CO 2 emissions are still too cheap and must be priced higher to sufficiently curtail emissions. Yet how high should a carbon tax be? Answering this question requires scientific insights on the costs and benefits of a carbon tax but also ethical – and thus political – judgements on how we value the damages from climate change that will happen in the near and in the far future. This paper discusses the key tradeoffs for policy makers, reviews the evidence on the social cost of carbon, and discusses global and unilateral policy options. It finds that a price of $77 per metric ton of carbon is defensible if we give 95% weight to damages occurring two generations (or 50 years) from now but higher if we want to further reduce the risk of catastrophic change. It is best implemented as part of trade agreements and in combination with R&D investment.

Most people are convinced that climate change is a threat and that it should somehow be dealt with. It is also clear that CO(2) emissions are still too cheap and must be priced higher to sufficiently curtail emissions. Yet how high should a carbon tax be? Answering this question requires scientific insights on the costs and benefits of a carbon tax but also ethical – and thus political – judgements on how we value the damages from climate change that will happen in the near and in the far future. This paper discusses the key tradeoffs for policy makers, reviews the evidence on the social cost of carbon, and discusses global and unilateral policy options. It finds that a price of $77 per metric ton of carbon is defensible if we give 95% weight to damages occurring two generations (or 50 years) from now but higher if we want to further reduce the risk of catastrophic change. It is best implemented as part of trade agreements and in combination with R&D investment.