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Industrial energy prices and export competitiveness: evidence from India

Surender Kumar () and Prerna Prabhakar
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Prerna Prabhakar: National Council of Applied Economic Research

Environmental Economics and Policy Studies, 2020, vol. 22, issue 1, No 1, 20 pages

Abstract: Abstract This paper empirically measures the impact of sectoral energy price differential between trading partners on Indian exports. Using dynamic gravity model, we estimate the response of Indian exports for 11 energy-intensive sectors to sectoral-level energy price asymmetry. We observe the absence of the contemporaneous effect of energy price differential on Indian exports, but the presence of persistence effects. We find that a 10% increase in relative energy prices negatively affects Indian sectoral exports by about 1% ranging from 0.9% for chemicals to 1.4% for non-ferrous metals, revealing a larger impact for energy-intensive sectors. These small effects imply that the concerns of carbon leakage are largely overplayed.

Keywords: Energy prices; Carbon leakage; Exports; Dynamic gravity; India (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 F18 Q56 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10018-019-00244-8

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