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Trade Integration & Political Turbulence: Environmental Policy Consequences

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Author Info
Per G. Fredriksson
Muthukumara Mani

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Abstract

This paper seeks to contribute to the unresolved issue of the effect of economic integration on environmental policy. In particular, we discuss the joint impact of trade openness and political uncertainty. Our theory predicts that the effect of trade integreation on the environment is conditional on the degree of political uncertainty. Trade integration raises the stringency of environmental policies, but the effect is reduced when the degree of political uncertainty is great. Political uncertainty has a positive effect on environmental policy as it reduces lobbying efforts. Applying our model to a unique data set of primarily developing countries, the empirical findings support the theory and are robust under alterntive specifications.

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Publisher Info
Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/150.

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Length: 25 pages
Date of creation: 15 Oct 2001
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Handle: RePEc:imf:imfwpa:01/150

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Related research
Keywords: Trade liberalization ; Economic policy ; Environment ; Economic models ;

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References listed on IDEAS
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    Other versions:
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  26. Bhattacharya, Rina, 1999. "Capital flight under uncertainty about domestic taxation and trade liberalization," Journal of Development Economics, Elsevier, vol. 59(2), pages 365-387, August. [Downloadable!] (restricted)
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