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Sources of emission reductions : Market and policy stringency effects

  • International trade and economic development affect air emissions. Previous studies have decomposed their effects into scale, composition, and technique effects. While the scale and composition effects occur through market responses, the technique effect is a policy-stringency influence through the mix of eironmental policies. This study analyzes whether the market or policy-stringency effects are more prominent. Previous studies have been unable to adequately separate the market and policy-stringency effects. To independently measure the technique effect, we use two indicators of policy stringency, i.e. shadow prices of energy and industrial energy prices. Thereby, policy stringency is treated as endogenous. The effects on six types of air emissions are estimated utilizing a sector-specific, international panel dataset that includes newly industrialized and former transition economies. The empirical results show that the major source of emissions reductions is the policy-stringency effect through carbon-related policies. Pollution offshoring to countries with weaker carbon-related regulation has a minor role in the reduction of air emissions.

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Document Type:Working Paper
Author:Erik HilleORCiD, Muhammad Shahbaz
Chairs and Professorships:Chair of Macroeconomics
Parent Title (English):HHL Working Paper
Series (Serial Number):HHL-Arbeitspapier / HHL Working paper (172)
Place of publication:Leipzig
Year of Completion:2018
Page Number:27
Content Focus:Academic Audience
Licence (German):License LogoUrheberrechtlich gesch├╝tzt