Do Climate Mitigation Efforts Hurt Trade Performance?

Jean-Louis Combes, Pascale Combes-Motel and Somlanare Kinda
Authors registered in the RePEc Author Service: Pascale Motel Combes ()

Revue d'économie politique, 2016, vol. 126, issue 5, 947-970

Abstract: This article provides new evidence on the effect of a difference in climate policy between trading partners on their bilateral trade flow for a sample of developed and developing countries over the 1980-2010 period. It innovates in two aspects. First, while previous studies have used partial measures of climate regulation, we estimate a measure of performance of a country?s domestic efforts for climate mitigation. This measure is the difference between observed CO2 emissions levels and ?structural? emissions, i.e. the emissions predicted by the determinants of environmental degradation as identified and modelled in the literature. Second, the effect of these efforts on bilateral trade flows is assessed using a gravity model. A difference in domestic efforts between trading partners has no effect on aggregate trade flows. Put differently, weak domestic efforts do not imply comparative advantage. In addition, similarities in domestic efforts, whether they are lax or stringent, are not shown to affect trade flows. These results are not influenced by the goods? characteristics (manufactured goods or raw materials) and are robust for different estimators.

Keywords: Trade flows; Gravity model; Domestic Efforts for Climate Mitigation; Structural CO2 emissions; Pollution haven hypothesis (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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