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Estimating the effects of Kyoto on bilateral trade flows using matching econometrics

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  • Rahel Aichele

    ()

  • Gabriel Felbermayr

    ()

Abstract

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

Suggested Citation

  • Rahel Aichele & Gabriel Felbermayr, 2011. "Estimating the effects of Kyoto on bilateral trade flows using matching econometrics," ifo Working Paper Series 119, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_119
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    Cited by:

    1. Francesca Sanna-Randaccio & Roberta Sestini & Ornella Tarola, 2014. "Unilateral Climate Policy and Foreign Direct Investment with Firm and Country Heterogeneity," Working Papers 2014.55, Fondazione Eni Enrico Mattei.
    2. Madison Condon & Ada Ignaciuk, 2013. "Border Carbon Adjustment and International Trade: A Literature Review," OECD Trade and Environment Working Papers 2013/6, OECD Publishing.
    3. Sato, Misato & Dechezleprêtre, Antoine, 2015. "Asymmetric industrial energy prices and international trade," Energy Economics, Elsevier, vol. 52(S1), pages 130-141.
    4. Zhu, Junming & Ruth, Matthias, 2015. "Relocation or reallocation: Impacts of differentiated energy saving regulation on manufacturing industries in China," Ecological Economics, Elsevier, vol. 110(C), pages 119-133.
    5. Goher-Ur-Rehman Mir & Servaas Storm, "undated". "Carbon Emissions and Economic Growth: Production-based versus Consumption-based Evidence on Decoupling," Working Papers Series 41, Institute for New Economic Thinking.
    6. Rahel Aichele & Gabriel Felbermayr & Inga Heiland, 2014. "EEG und internationaler Wettbewerb: Ist die besondere Ausgleichsregelung haltbar?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(02), pages 23-29, January.
    7. Somlanare Romuald KINDA & Pascale COMBES MOTEL & Jean-Louis COMBES, 2014. "Do Environmental Policies Hurt Trade Performance?," Working Papers 201404, CERDI.
    8. Reyer Gerlagh, Nicole A. Mathys and Thomas O. Michielsen, 2015. "Energy Abundance, Trade and Specialization," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    9. Sakamoto, Tomoyuki & Managi, Shunsuke, 2015. "Energy pricing impact on domestic economy under recent climate action," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 150-162.
    10. Peter Egger & Sergey Nigai, 2015. "Energy Demand and Trade in General Equilibrium," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 191-213, February.
    11. Matthew A. COLE & Robert R.J. ELLIOTT & OKUBO Toshihiro & Liyun ZHANG, 2017. "The Pollution Outsourcing Hypothesis: An empirical test for Japan," Discussion papers 17096, Research Institute of Economy, Trade and Industry (RIETI).
    12. Jared C. Carbone & Nicholas Rivers, 2014. "Climate policy and competitiveness: Policy guidance and quantitative evidence," Working Papers 2014-05, Colorado School of Mines, Division of Economics and Business.
    13. Lisa Anouliès, 2015. "The Strategic and Effective Dimensions of the Border Tax Adjustment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 824-847, December.

    More about this item

    Keywords

    Competitiveness; Kyoto Protocol; matching econometrics; treatment effects;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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