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Estimating the effects of Kyoto on bilateraltrade flows using matching econometrics

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  • Rahel Aichele

    ()

  • Gabriel J. Felbermayr

Abstract

Many Kyoto countries fear a loss of competitiveness due to unilateral climate policyefforts; policymakers therefore call for carbon-related border tax adjustments. With thispaper we attempt to estimate the treatment effect of Kyoto commitment on bilateralexport flows using regression-adjusted differences-in-differences matching techniques.The gravity and international environmental agreement formation literatures provideguidelines for the choice of matching variables. We find that Kyoto countries' exportsare reduced by 13–14% due to Kyoto commitment. Trade effects are largest in energyintensive,homogeneous industries such as iron and steel, non-ferrous metals, organicand inorganic chemicals but also in machinery and equipment.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 119.

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Date of creation: 2011
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Handle: RePEc:ces:ifowps:_119

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Keywords: Competitiveness; Kyoto Protocol; matching econometrics; treatment effects;

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References

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  1. Aaditya Mattoo & Arvind Subramanian & Dominique van der Mensbrugghe & Jianwu He, 2009. "Reconciling Climate Change and Trade Policy," Working Paper Series WP09-15, Peterson Institute for International Economics.
  2. Aichele, Rahel & Felbermayr, Gabriel, 2012. "Kyoto and the carbon footprint of nations," Munich Reprints in Economics 20163, University of Munich, Department of Economics.
  3. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
  4. Christian Broda & David Weinstein, 2004. "Globalization and the gains from variety," Staff Reports 180, Federal Reserve Bank of New York.
  5. Daniel Millimet & John List, 2004. "The Case of the Missing Pollution Haven Hypothesis," Journal of Regulatory Economics, Springer, vol. 26(3), pages 239-262, 08.
  6. Paul Veenendaal & Ton Manders, 2008. "Border tax adjustment and the EU-ETS, a quantitative assessment," CPB Document 171, CPB Netherlands Bureau for Economic Policy Analysis.
  7. Josh Ederington, Arik Levinson & Jenny Minier, 2003. "Footlose and Pollution Free," Working Papers gueconwpa~03-03-04, Georgetown University, Department of Economics.
  8. Baier, Scott L. & Bergstrand, Jeffrey H., 2009. "Estimating the effects of free trade agreements on international trade flows using matching econometrics," Journal of International Economics, Elsevier, vol. 77(1), pages 63-76, February.
  9. Peter Egger & Christoph Jeßberger & Mario Larch, 2011. "Trade and investment liberalization as determinants of multilateral environmental agreement membership," International Tax and Public Finance, Springer, vol. 18(6), pages 605-633, December.
  10. Murdoch, James C. & Sandler, Todd, 1997. "The voluntary provision of a pure public good: The case of reduced CFC emissions and the Montreal Protocol," Journal of Public Economics, Elsevier, vol. 63(3), pages 331-349, February.
  11. Rose, Andrew K & Spiegel, Mark, 2006. "Non-Economic Engagement and International Exchange: The Case of Environmental Treaties," CEPR Discussion Papers 5942, C.E.P.R. Discussion Papers.
  12. Aakvik, Arild & Tjøtta, Sigve, 2007. "Do Collective Actions Clear Common Air? The Effect of International Environmental Protocols on Sulphur Emissions," Working Papers in Economics 10/07, University of Bergen, Department of Economics.
  13. Rahel Aichele & Gabriel J. Felbermayr, 2011. "Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade," CESifo Working Paper Series 3661, CESifo Group Munich.
  14. John A. List & Daniel L. Millimet & Per G. Fredriksson & W. Warren McHone, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 944-952, November.
  15. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
  16. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
  17. Egger, Hartmut & Egger, Peter & Greenaway, David, 2008. "The trade structure effects of endogenous regional trade agreements," Journal of International Economics, Elsevier, vol. 74(2), pages 278-298, March.
  18. Kurt J. Beron & James C. Murdoch & Wim P. M. Vijverberg, 2003. "Why Cooperate? Public Goods, Economic Power, and the Montreal Protocol," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 286-297, May.
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Cited by:
  1. Somlanare Romuald KINDA & Pascale COMBES MOTEL & Jean-Louis COMBES, 2014. "Do Environmental Policies Hurt Trade Performance?," Working Papers 201404, CERDI.
  2. Rahel Aichele & Gabriel Felbermayr & Inga Heiland, 2014. "EEG und internationaler Wettbewerb: Ist die besondere Ausgleichsregelung haltbar?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 67(02), pages 23-29, 01.

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