Jie He (Université de Sherbrooke)
mercredi 22 juin 2016
Trade composition and carbon control efforts: carbon leakage revisited based on the carbon terms of trade of China (PDF)
Abstract: This paper investigates the changing patterns of the carbon terms of trade (CTT) of China with its 55 trade partners during 1996-2009. Using a Gravity-style model, we analyze how China’s CTT was affected by the general environmental regulatory strictness of its trade partners and distinguish the potential difference in this impact between Annex I and non-Annex I countries. Among the Annex I countries, we focus on those that committed to binding carbon reduction targets under the Kyoto Protocol and further distinguish those that actually achieved the target (whether in whole or part). Our results confirm that, all else being equal, the environmental regulation in an Annex I country has a significantly higher impact on China’s CTT. This conclusion is supported by majority of the 26 environmental regulatory stringency measurements previously used in the literature and robust after considering the potential endogeneity of the decision to commit to the Kyoto targets.