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Research output: Working paper
Research output: Working paper
}
TY - UNPB
T1 - The Short and Long-Run Effects of International Environmental Agreements on Trade
AU - Ederington, Josh
AU - Paraschiv, Mihai
AU - Zanardi, Maurizio
PY - 2018
Y1 - 2018
N2 - Does the ratification of an international environmental agreement (IEA) reducea country’s competitiveness on world markets? In this paper, we take a gravity regressionapproach to answering this question by using industry-level bilateral tradedata and employing time-varying country fixed effects to control for the endogeneityof treaty participation. We find that ratifying an IEA has significant (albeit small)negative effects on the exports of a country’s median manufacturing industry as well as a compositional shift towards exporting cleaner goods. However, we also show that this negative competitive effect on the median manufacturing industry disappears in the long-run. In fact, the positive compositional shift becomes stronger in the long-run as a ratifying country sees a further decline in exports of dirtier industries which is more than compensated for by an increase in exports of cleaner industries, with an overall positive but negligible effect on employment.
AB - Does the ratification of an international environmental agreement (IEA) reducea country’s competitiveness on world markets? In this paper, we take a gravity regressionapproach to answering this question by using industry-level bilateral tradedata and employing time-varying country fixed effects to control for the endogeneityof treaty participation. We find that ratifying an IEA has significant (albeit small)negative effects on the exports of a country’s median manufacturing industry as well as a compositional shift towards exporting cleaner goods. However, we also show that this negative competitive effect on the median manufacturing industry disappears in the long-run. In fact, the positive compositional shift becomes stronger in the long-run as a ratifying country sees a further decline in exports of dirtier industries which is more than compensated for by an increase in exports of cleaner industries, with an overall positive but negligible effect on employment.
KW - international environmental agreements
KW - trade flows
KW - gravity equation
M3 - Working paper
T3 - Economics Working Papers Series
BT - The Short and Long-Run Effects of International Environmental Agreements on Trade
PB - Lancaster University, Department of Economics
CY - Lancaster
ER -