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Estimating the effects of Kyoto on bilateraltrade flows using matching econometrics

  • Rahel Aichele


  • Gabriel J. 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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Paper provided by Ifo Institute - Leibniz Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 119.

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Date of creation: 2011
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Handle: RePEc:ces:ifowps:_119
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