Asymmetric industrial energy prices and international trade

Misato Sato () and Antoine Dechezleprêtre

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper measures the response of bilateral trade flows to differences in industrial energy prices across countries. Using a panel for the period 1996–2011 including 42 countries, 62 sectors and covering 60% of global merchandise trade, we estimate the short-run effects of sector-level energy price asymmetry on trade. We find that changes in relative energy prices have a statistically significant but very small impact on imports. On average, a 10% increase in the energy price difference between two country-sectors increases imports by 0.2%. The impact is larger for energy-intensive sectors. Even in these sectors however, the magnitude of the effect is such that changes in energy price differences across time explain less than 0.01% of the variation in trade flows. Simulations based on our model predict that a €40-65/tCO2 price of carbon in the EU ETS would increase Europe’s imports from the rest of the world by less than 0.05% and decrease exports by 0.2%.

Keywords: energy prices; international trade; carbon taxes (search for similar items in EconPapers)
JEL-codes: F14 F18 Q56 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ene and nep-int
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Citations: View citations in EconPapers (35)

Published in Energy Economics, 2015, 52(S1), pp. S130-S141. ISSN: 0140-9883

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http://eprints.lse.ac.uk/63634/ Open access version. (application/pdf)

Related works:
Journal Article: Asymmetric industrial energy prices and international trade (2015)
Working Paper: Asymmetric Industrial Energy Prices and International Trade (2015)
Working Paper: Asymmetric industrial energy prices and international trade (2015)
Working Paper: Asymmetric industrial energy prices and international trade (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:63634

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