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Trade Openness Andco2emissions In Tunisia

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  • HOUSSEM EDDINE CHEBBI

    () (LEGI-Polytechnic School of Tunisia, Tunisia;
    Faculté des Sciences Economiques et de Gestion de Nabeul (FSEGN), Campus Universitaire Mrezgua, 8000, Nabeul, Tunisia)

  • MARCELO OLARREAGA

    () (University of Geneva, Switzerland;
    CEPR, London, UK)

  • HABIB ZITOUNA

    () (LIM(MES)-Polytechnic School of Tunisia, Tunisia;
    FSEGN — University of Carthage, Tunisia)

Abstract

By reallocating resources among more or less polluting sectors, trade reforms affect pollution levels directly. They also affect pollution indirectly through their impact on economic activity and income levels, which then affect not only emissions, but also the demand for higher environmental standards. The sign of the direct and indirect effects is ambiguous. In other words, whether trade openness leads to more or less pollution is an empirical question. Using cointegration techniques, we disentangle the long- and short-run relationship between trade openness, income per capita andCO2emissions in Tunisia, as well as the extent of Granger causality among these variables. Results suggest that the direct effect of trade openness onCO2emissions is positive both in the short and the long run, but the indirect effect is negative at least in the long run. The overall effect is positive both in the short and long run, highlighting the importance for trade reforms to be accompanied by strong environmental policies.

Suggested Citation

  • Houssem Eddine Chebbi & Marcelo Olarreaga & Habib Zitouna, 2011. "Trade Openness Andco2emissions In Tunisia," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 29-53.
  • Handle: RePEc:wsi:medjxx:v:03:y:2011:i:01:n:s1793812011000314
    DOI: 10.1142/S1793812011000314
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    Keywords

    Trade openness; CO2emissions; cointegration;
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