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

Thomas Jobert (), Fatih Karanfil and Anna Tykhonenko ()
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Fatih Karanfil: University of Paris Ouest, France

No 2015-31, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: 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.

Keywords: FDI; trade openness, CO2 emissions, regulatory stringency, Bayesian shrinkage estimator (search for similar items in EconPapers)
JEL-codes: C33 F18 Q56 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-09
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-int and nep-res
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Related works:
Working Paper: Trade and environment: further empirical evidence from heterogeneous panels using aggregate data (2016)
Working Paper: Trade and Environment: Further Empirical Evidence from Heterogeneous Panels Using Aggregate Data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2015-31

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