SEMINAR 20 February 2012: Tao Wang, Princeton University

Climate Change Policy and Patterns of International Trade

Abstract

This paper analyzes the relationship between climate change policies and international trade flows. Using data on carbon dioxide (CO2) emissions intensities for disaggregated industries and US imports from 1990 to 2010, I find that committing to a quantified emissions target under the Kyoto Protocol is associated with a country exporting less to US in emissions-intensive industries. This effect is quantitatively important and is comparable to that of factor endowments on comparative advantage. Moreover this pattern is not present prior to the adoption of the Kyoto Protocol, but only emerges as it went into effect. On the other hand, there is little evidence that non-committed countries are specializing in more emissions-intensive industries.

JEL Classifcation Codes: F18, Q54, Q56

Keywords: international trade, climate change, Kyoto Protocol, CO2 emissions intensity.