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Exploring the NDC-misspecification Margins due to the Trade-induced Spillover and Feedback Effects for Top-three Emitters

Author

Listed:
  • Suvajit Banerjee

    (Suvajit Banerjee (corresponding author) is at the National Council of Applied Economic Research (NCAER), New Delhi, India. E-mail: sbanerjee@ncaer.org)

Abstract

The study offers an insightful comparative static analysis of national energy savings, emphasising the intricate interactions between trade-induced spillover effects and feedback dynamics. Developing an interregional input–output (IRIO) model, it focuses on the world’s three largest carbon-emitting economies: China, the USA and India. Through a series of compelling simulation scenarios rooted in a tripartite energy-saving climate treaty, the research uncovers significant revelations. These simulations shed light on the profound impact that carbon-constraining initiatives in non-free-rider economies can have on the energy consumption of free-rider economies. Remarkably, the findings illustrate that the USA, in all simulated scenarios, achieves substantial energy savings by shifting its production activities to China and India. On the other hand, China capitalises on the energy demands transferred from India and the USA, resulting in noteworthy energy savings. India emerges as a non-free-rider economy capable of conserving energy when the USA behaves as a free rider; however, it struggles to achieve similar savings when it operates as a free rider itself. This analysis not only highlights the intricate web of energy interactions among these economies but also underscores the potential for cooperative efforts in tackling global energy challenges, ultimately paving the way for a more sustainable future. JEL Codes: C67, F64, Q43, Q48

Suggested Citation

  • Suvajit Banerjee, 2025. "Exploring the NDC-misspecification Margins due to the Trade-induced Spillover and Feedback Effects for Top-three Emitters," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 19(1), pages 70-89, May.
    • Handle: RePEc:sae:mareco:v:19:y:2025:i:1:p:70-89
    DOI: 10.1177/00252921251360845
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    References listed on IDEAS

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    1. Suvajit Banerjee, 2019. "Addressing the Drivers of Carbon Emissions Embodied in Indian Exports: An Index Decomposition Analysis," Foreign Trade Review, , vol. 54(4), pages 300-333, November.
    2. Erik Dietzenbacher & Jesper Stage, 2006. "Mixing oil and water? Using hybrid input-output tables in a Structural decomposition analysis," Economic Systems Research, Taylor & Francis Journals, vol. 18(1), pages 85-95.
    3. Balsalobre-Lorente, Daniel & Driha, Oana M. & Shahbaz, Muhammad & Sinha, Avik, 2020. "The effects of tourism and globalization over environmental degradation in developed countries," MPRA Paper 100092, University Library of Munich, Germany.
    4. Lina I. Brand-Correa & Paul E. Brockway & Claire L. Copeland & Timothy J. Foxon & Anne Owen & Peter G. Taylor, 2017. "Developing an Input-Output Based Method to Estimate a National-Level Energy Return on Investment (EROI)," Energies, MDPI, vol. 10(4), pages 1-21, April.
    5. Banerjee, Suvajit, 2021. "Conjugation of border and domestic carbon adjustment and implications under production and consumption-based accounting of India's National Emission Inventory: A recursive dynamic CGE analysis," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 68-86.
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    Keywords

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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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