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Estimating the Effects of Kyoto on Bilateral Trade Flows Using Matching Econometrics

  • Rahel Aichele
  • Gabriel Felbermayr

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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Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 36 (2013)
Issue (Month): 3 (03)
Pages: 303-330

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Handle: RePEc:bla:worlde:v:36:y:2013:i:3:p:303-330
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