Template-Type: ReDIF-Paper 1.0
Author-Name: Josh Ederington
Author-Name-First: Josh
Author-Name-Last: Ederington
Author-Name: Mihai Paraschiv
Author-Name-First: Mihai
Author-Name-Last: Paraschiv
Author-Name: Maurizio Zanardi
Author-Name-First: Maurizio
Author-Name-Last: Zanardi
Title: The Short and Long-Run Effects of International Environmental Agreements on Trade
Abstract: Does the ratification of an international environmental agreement (IEA) reduce<br/>a country’s competitiveness on world markets? In this paper, we take a gravity regression<br/>approach to answering this question by using industry-level bilateral trade<br/>data and employing time-varying country fixed effects to control for the endogeneity<br/>of treaty participation. We find that ratifying an IEA has significant (albeit small)<br/>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.
Creation-Date: 2018
File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2018_015.pdf
File-Format: application/pdf
Number: 242514732
Classification-JEL: F14, F18, F53, F61, Q56
Keywords: international environmental agreements, trade flows, gravity equation
Handle: RePEc:lan:wpaper:242514732