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GTAP Resource #2359

"Coordinating Global Trade and Environmental Policy: The Role of Pre-Existing Distortions"
by Adkins, Liwayway and Richard Garbaccio

While economists generally agree that trade liberalization can be an important driver of economic growth, there is concern that increased trade can have negative impacts on the environment. One alternative is to coordinate trade liberalization with corrective environmental policies. A growing body of research, however, has shown that environmental policies may involve previously unrecognized welfare costs due to their interaction with pre-existing distortions in the economy. We augment the GTAP data base with data on taxes and labor market distortions and develop a global CGE model which accounts for tax interaction and revenue recycling effects. We explore a number of options for coordinated trade and environmental policy and find that accounting for second best effects can significantly alter the results. We show that coordinated trade and environmental reform could potentially be used to help break the current impasse between developed and developing countries over international climate policy.

Resource Details (Export Citation) GTAP Keywords
Category: 2007 Conference Paper
Status: Published
By/In: Presented at the 10th Annual Conference on Global Economic Analysis, Purdue University, USA
Date: 2007
Created: Garbaccio, R. (4/14/2007)
Updated: Garbaccio, R. (7/8/2010)
Visits: 2,709
No keywords have been specified.

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