Trade Integration and Political Turbulence: Environmental Policy Consequences

October 1, 2001

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Muthukumara Mani, and Per G. Fredriksson Trade Integration and Political Turbulence: Environmental Policy Consequences, (USA: International Monetary Fund, 2001) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper seeks to contribute to the unresolved issue of the effect of economic integration on environmental policy. In particular, we discuss the joint impact of trade openness and political uncertainty. Our theory predicts that the effect of trade integreation on the environment is conditional on the degree of political uncertainty. Trade integration raises the stringency of environmental policies, but the effect is reduced when the degree of political uncertainty is great. Political uncertainty has a positive effect on environmental policy as it reduces lobbying efforts. Applying our model to a unique data set of primarily developing countries, the empirical findings support the theory and are robust under alterntive specifications.

Subject: Corruption, Crime, Economic integration, Environment, Environmental policy, Environmental taxes, Taxes, Trade integration

Keywords: Corruption, Environmental policy, Environmental regulations, Environmental taxes, Government turnover, Incumbent government, Least squares, Lobby group, Lobbying, North America, Policy choice, Political instability, Producer lobby, Trade integration, Trade liberalization, Uncertainty, Utility function, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/150
Stock No:

WPIEA1502001
ISBN:

9781451856965
ISSN:

1018-5941

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