Estimating the Effects of Kyoto on Bilateral Trade Flows Using Matching Econometrics

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. An electronic version of the paper may be downloaded from the Ifo website www.cesifo-group.de. Ifo Working Paper No. 119 Estimating the effects of Kyoto on bilateral trade flows using matching econometrics* Abstract Many Kyoto countries fear a loss of competitiveness due to unilateral climate policy efforts; policymakers therefore call for carbon-related border tax adjustments. With this paper we attempt to estimate the treatment effect of Kyoto commitment on bilateral export flows using regression-adjusted differences-in-differences matching techniques. The gravity and international environmental agreement formation literatures provide guidelines for the choice of matching variables. We find that Kyoto countries' exports are reduced by 13-14% due to Kyoto commitment. Trade effects are largest in energyintensive, homogeneous industries such as iron and steel, non-ferrous metals, organic and inorganic chemicals but also in machinery and equipment. Terms of use: Documents in EconStor may Ifo Institute -Leibniz Institute for Economic Research at the University of MunichJEL Code: F18, Q54, Q56.

Border Carbon Adjustment and International Trade: A Literature Review

“…They find that that Kyoto commitments lead to increased imports of embedded carbon in committed countries, resulting in leakage. Their recent follow-up paper finds that exports of countries that are bound by the Kyoto Protocol are reduced by 13-14% (Aichele and Felbermayr, 2013). Paltsev (2001) also found that high rates of leakage occur in these industries as well as in the mining industry.…”

Effects of Kyoto Protocol on CO2 Emissions: A Five-Country Rolling Regression Analysis

“…and most committed parties were far from achieving their binding ceiling targets. Kyoto reduced domestic emissions in committed countries, has not lowered domestic footprints, but increased the share of imported over domestic emissions with a carbon leakage [36][37][38][39][40].…”

“…Persistent consumption of fossil fuels enabled early reduction in the turning points of Italy's EKCs in response to the Kyoto Protocol. Kyoto commitment had reduced the competitiveness of many Kyoto countries and their exports as indicated by Aichele and Felbermayr [37]. It is also induced under large cost adjusting to the austerity policies imposed by the European Union during its economic recessions.…”

Unilateral Climate Policy and Foreign Direct Investment with Firm and Country Heterogeneity

“…Petrakis andXepapadeas, 2003, Ulph andValentini, 2001; Abe 1 For the debate on the new EU climate and energy package setting 2030 targets, see for instance PBL (2012), and Financial Times, "EU must improve its aim on energy", December 2, 2013. 2 In the policy debate the key issue is the e¤ect of tight regulation on the pro…tability of domestic production, more than on national …rms'global pro…ts. 3 Reinaud (2008, p. 3) indicates that there is also a third channel (the fossil fuel price channel), but focuses on the two competitiveness-driven channels, as they can be more realistically addressed via national policies.…”

“…Politicians worry that the more stringent national mitigation measures might lead domestic production and jobs shifting to other less regulated regions (the so called Pollution Havens). 2 Carbon leakage takes place if a policy aimed to limit emissions in a region is the direct cause of an increase in emissions outside the region itself, thus hampering its e¤ectiveness. Two main competitiveness mechanisms may drive carbon leakage: short-term impacts mainly via trade ‡ows and longterm responses involving also relocation decisions via foreign direct investment (FDI).…”