Centro de Estudios Monetarios y Financieros
Casado del Alisal 5, 28014 Madrid
Information about this author at RePEc
NBER Working Papers and Publications
|August 2012||Sources of Comparative Advantage in Polluting Industries|
with Fernando Broner, Vasco M. Carvalho: w18337
We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identi...ed by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital.