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Aichele, Rahel; Felbermayr, Gabriel (2011): Estimating the effects of Kyoto on bilateral trade flows using matching econometrics. Ifo Working Paper, 119
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Abstract

Many Kyoto countries fear a loss of competitiveness due to unilateral climate policyefforts; policymakers therefore call for carbon-related border tax adjustments. With thispaper we attempt to estimate the treatment effect of Kyoto commitment on bilateralexport flows using regression-adjusted differences-in-differences matching techniques. The gravity and international environmental agreement formation literatures provideguidelines for the choice of matching variables. We find that Kyoto countries’ exportsare reduced by 13-14% due to Kyoto commitment. Trade effects are largest in energyintensive, homogeneous industries such as iron and steel, non-ferrous metals, organicand inorganic chemicals but also in machinery and equipment.

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