 Estimating Carbon Leakage and the Efficiency of Border Adjustments in General Equilibrium - Does Sectoral Aggregation Matter?Justin Caron No 332081, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Abstract: Estimates of the carbon leakage resulting from sub-global climate policies tend to be lower when using economy-wide general equilibrium models than what technologyspecific bottom-up models suggest. In order to test whether this difference is due to excessive sectoral aggregation, I exploit disaggregated data and estimate unobserved values to create a dataset with rich industrial sector detail. The bias caused by sectoral aggregation is estimated by calibrating a general equilibrium model to this dataset and comparing results with those generated from more aggregated datasets. A stylized unilateral carbon pricing policy is simulated. Results show that aggregated calibrations overestimate industrial output loss and underestimate the increase in CO2 embodied in imports. The efficiency of border carbon adjustments at reducing leakage is also underestimated. However, I find that general equilibrium estimates of carbon prices and economy-wide leakage rates are mostly unaffected by the degree of industrial aggregation. Keywords: Environmental Economics and Policy; Resource/Energy Economics and Policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332081 Access Statistics for this paper More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC. |
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