Asymmetric industrial energy prices and international trade

Sato, Misato ORCID: 0000-0002-9978-9595 and Dechezlepretre, Antoine (2015) Asymmetric industrial energy prices and international trade. Energy Economics, 52 (S1). S130-S141. ISSN 0140-9883

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Abstract

This paper measures the response of bilateral trade flows to differences in industrial energy prices across countries. Using a panel for the period 1996–2011 including 42 countries, 62 sectors and covering 60% of global merchandise trade, we estimate the short-run effects of sector-level energy price asymmetry on trade. We find that changes in relative energy prices have a statistically significant but very small impact on imports. On average, a 10% increase in the energy price difference between two country-sectors increases imports by 0.2%. The impact is larger for energy-intensive sectors. Even in these sectors however, the magnitude of the effect is such that changes in energy price differences across time explain less than 0.01% of the variation in trade flows. Simulations based on our model predict that a €40-65/tCO2 price of carbon in the EU ETS would increase Europe’s imports from the rest of the world by less than 0.05% and decrease exports by 0.2%.

Item Type:	Article
Official URL:	http://www.sciencedirect.com/science/journal/01409...
Additional Information:	© 2015 Elsevier B.V © CC BY 4.0
Divisions:	Grantham Research Institute Climate Change Economics and Policy
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce
JEL classification:	F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade F - International Economics > F1 - Trade > F18 - Trade and Environment Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounting; Environmental Equity
Date Deposited:	18 Sep 2015 13:32
Last Modified:	13 Nov 2024 00:09
Projects:	308481 (ENTRACTE), ES/K006576/1
Funders:	European Union Seventh Framework Programme, Global Green Growth Institute, Economic and Social Research Council
URI:	http://eprints.lse.ac.uk/id/eprint/63634

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