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Trade imbalance, heavy goods, and pollution

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  • Lee, Jungho
  • Wei, Shang-Jin
  • Xu, Jianhuan

Abstract

We propose a new welfare effect of trade surplus. Guided by insight from several fields in economics, we provide evidence that an increase in a country's trade surplus alters the unit shipping costs for its trade and the composition of its imports in ways that induce more pollution in the country in equilibrium. This new form of welfare loss of trade imbalance has not been accounted for in the existing international economics literature.

Suggested Citation

  • Lee, Jungho & Wei, Shang-Jin & Xu, Jianhuan, 2024. "Trade imbalance, heavy goods, and pollution," Journal of International Money and Finance, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:jimfin:v:144:y:2024:i:c:s0261560624000779
    DOI: 10.1016/j.jimonfin.2024.103090
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    References listed on IDEAS

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