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Environmental Stringency And International Trade: A Look Across The Globe

Author

Listed:
  • Bojan Shimbov

    (University Jaume I, Institute of International Economics & Department of Economics)

  • Inmaculada Martínez-Zarzoso

    (University Jaume I, Institute of International Economics & Department of Economics)

  • Maite Alguacil

    (University Jaume I, Institute of International Economics & Department of Economics)

Abstract

The main goal of this paper is to analyze the impact of carbon pricing, as a means to reducing carbon dioxide (CO2) emissions, on international trade in goods using a pane dataset of OECD and other developing countries with data over the period 2007 to 2018. We use Poisson pseudo-maximum likelihood regressions (PPML) with multi-dimensional fixed effects to estimate a gravity model of trade with panel data. To conduct our empirical analysis, we combine data on emissions from fuel combustion, which account for approximately 80 percent of global human-induced CO2 emissions and have been the main target of carbon pricing, with detailed international trade data using the HS 6-digit codes and information on the market-based policies applied by the countries over the sample period. Our findings confirm that, regardless of the environmental stringency variable used, pollution constraints have a significant impact on trade flows, with this effect being particularly pronounced in the most polluting industries.

Suggested Citation

  • Bojan Shimbov & Inmaculada Martínez-Zarzoso & Maite Alguacil, 2024. "Environmental Stringency And International Trade: A Look Across The Globe," Proceedings of the 5th International Conference "Economic and Business Trends Shaping the Future" 2024 009, Faculty of Economics-Skopje, Ss Cyril and Methodius University in Skopje.
    • Handle: RePEc:aoh:conpro:2024:i:5:p:62-87
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    More about this item

    Keywords

    Environment and trade; Environmental policy; Pollution haven hypothesis; Gravity models; OECD;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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