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Asymmetric industrial energy prices and international trade

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

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Identification Number: 10.1016/j.eneco.2015.08.020

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
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Research centres and groups > Centre for Climate Change Economics and Policy (CCCEP)
Collections > Economists Online
Date Deposited: 18 Sep 2015 13:32
Last Modified: 20 Aug 2019 18:19
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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