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Environmental Policy and International Trade

Author

Listed:
  • McKibbin, W.J.
  • Wilcoxen, P.J.

Abstract

This paper explores the empirical link between environmental policy and international trade. Using an estimated global simulation model, the paper focusses on the extent to which international trade flows are redirected as a result of unilateral versus multilateral taxes on the emission of carbon dioxide. We find that a carbon tax in the United States produces little redirection of trade either in the short run or the long run because electric power generation and local transportation are by far the most carbon intensive activities and both are largely non-traded. We also illustrate the importance of the assumptions about the way in which the revenue from the carbon tax is recycled. We find that the revenue recycling assumption has important macroeconomic implications for saving and investment balances and therefore for the adjustment of trade flows.
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Suggested Citation

  • McKibbin, W.J. & Wilcoxen, P.J., 1995. "Environmental Policy and International Trade," Papers 117, Brookings Institution - Working Papers.
  • Handle: RePEc:fth:brooki:117
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    Cited by:

    1. Martin, Will, 2000. "Reducing carbon dioxide emissions through joint implementation of projects," Policy Research Working Paper Series 2359, The World Bank.
    2. Warwick J McKibbin & Robert Shackleton & Peter J Wilcoxen, 1998. "The Potential Effects of International Carbon Emissions Permit Trading," Departmental Working Papers 1998-09, The Australian National University, Arndt-Corden Department of Economics.
    3. W. J. McKibbin & T. J. Bok, "undated". "The Impact on the Asia-Pacific Region of Fiscal Policy of the United States and Japan," Discussion Papers 120, Brookings Institution International Economics.
    4. Warwick J. McKibbin & Martin T. Ross & Robert Shackleton & Peter J. Wilcoxen, 1999. "Emissions Trading, Capital Flows and the Kyoto Protocol," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 287-333.
    5. Warwick J. McKibbin & Peter J. Wilcoxen, 1999. "Permit Trading Under the Kyoto Protocol and Beyond," Economics and Environment Network Working Papers 9902, Australian National University, Economics and Environment Network.
    6. Warwick Mckibbin & Dominick Salvatore, 1995. "The global economic consequences of the Uruguay Round," Open Economies Review, Springer, vol. 6(2), pages 111-129, April.
    7. Warwick J. McKibbin & Robert Shackleton & Peter J. Wilcoxen, 1998. "The Potential Effects of International Carbon Emissions Permit Trading Under the Kyoto Protocol," Economics and Environment Network Working Papers 9805, Australian National University, Economics and Environment Network.
    8. Liddle, Brantley, 2001. "Free trade and the environment-development system," Ecological Economics, Elsevier, vol. 39(1), pages 21-36, October.
    9. McKibbin, Warwick J., 1998. "Greenhouse abatement policy: insights from the G-cubed multi-country model," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(1), March.

    More about this item

    Keywords

    ENVIRONMENT; INTERNATIONAL TRADE; POLLUTION; TAXES;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • F10 - International Economics - - Trade - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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