Are Free Trade Agreements Good for the Environment? A Panel Data Analysis

Mehdi Nemati (), Wuyang Hu and Michael Reed

No 235631, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: This study attempts to empirically re-examine the relationship between free trade agreements (FTAs) and greenhouse gas (GHG) emissions. For this aim, we chose three different free trade agreements: Southern Common Market (MERCOSUR), North American Free Trade Agreement (NAFTA), and the Australia-United States Free Trade Agreement (AUSFTA). These FTAs are between developing countries, developed and developing countries, and only developed countries, respectively. Panel unit root, panel cointegration, and fully modified OLS (FMOLS) estimators are employed to find the longrun relationship between GHG emission, trade liberalization, and other economic factors. The results indicate that the environmental effect of a free trade agreement depends on the agreement type. When the agreement is among only developed or only developing countries, there is no environmental damage to the world and these types of FTAs can be beneficial for the world environment. However, when developing and developed countries are in the agreement, world GHG emissions increase.

Keywords: Environmental Economics and Policy; International Relations/Trade (search for similar items in EconPapers)
Pages: 35
Date: 2016-05-25
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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Citations: View citations in EconPapers (7)

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Journal Article: Are free trade agreements good for the environment? A panel data analysis (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235631

DOI: 10.22004/ag.econ.235631

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