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Trade and Environment: Further Empirical Evidence from Heterogeneous Panels Using Aggregate Data

Listed author(s):
  • Thomas Jobert

    (University of Nice Sophia Antipolis, France
    GREDEG CNRS)

  • Fatih Karanfil

    (University of Paris Ouest, France
    EconomiX - CNRS)

  • Anna Tykhonenko

    (University of Nice Sophia Antipolis, France
    GREDEG CNRS)

Despite the growing body of work devoted to the impacts of development and international trade flows on the environment, the current state of empirical research is still controversial. In this line of analysis, the empirical studies using panel data face two simultaneous challenges. One is associated with the potential presence of unobserved cross-country heterogeneity in the panel, and the other with the use of aggregate data on international trade. In this paper, we apply both the dynamic fixed effects and empirical iterative Bayes estimators to a global panel of annual data on 55 countries spanning the period 1970-2013, to show that when country heterogeneity is accurately accounted for in the estimation, it is possible to obtain significant impacts of trade variables on the environment, even with aggregate data. Based on the estimation results and further information on the stringency of environmental regulations in both developed and developing countries involved in the analysis, we identify different country groups having similar features with respect to the trade-environment relationship. Future multilateral actions and agreements on climate change should account for differences in countries' trade structures and development levels that determine their capabilities to mitigate and adapt to climate change.

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File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2015-31.pdf
File Function: First version, 2015
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Paper provided by Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis in its series GREDEG Working Papers with number 2015-31.

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Length: 33 pages
Date of creation: Sep 2015
Handle: RePEc:gre:wpaper:2015-31
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