Energy Prices and International Trade : Incorporating Input-Output Linkages
This paper examines the effect of energy costs on industry export competitiveness. Most studies in the literature use direct energy consumption (energy consumption at the final stage of production) and domestic energy prices to compute energy costs...
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/984751496166477456/Energy-prices-and-international-trade-incorporating-input-output-linkages http://hdl.handle.net/10986/26948 |
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okr-10986-269482021-06-08T14:42:46Z Energy Prices and International Trade : Incorporating Input-Output Linkages Chan, H. Ron Manderson, Edward Zhang, Fan SUBSIDIES CARBON LEAKAGES ENERGY COSTS EXPORT COMPETITIVENESS INPUT-OUTPUT LINKAGES TRADE ENERGY PRICES CROSS-SUBSIDIZATION This paper examines the effect of energy costs on industry export competitiveness. Most studies in the literature use direct energy consumption (energy consumption at the final stage of production) and domestic energy prices to compute energy costs faced by domestic industries. Using multi-country input-output information, this study measures the effect of aggregate energy costs on export performance, where aggregate energy costs include not only direct energy costs, but also indirect energy costs passed on through the upstream supply chain. This study develops a theoretical trade model that incorporates tradable intermediate goods to inform its empirical strategy. It then estimates a reduced-form model using a panel data for 10 manufacturing sectors in 43 countries from 1991 to 2012. The analysis finds that ignoring input-output relationships can lead to significant over- or underestimates of the effect of energy price shocks on exports, depending on intermediate factor intensities and trade relationships. Using estimated trade elasticities, the study simulates the economic consequences of energy cross-subsidies and carbon taxes. The results show that energy cross-subsidies that raise energy tariffs on industry to support lower rates for households and farmers in India could reduce the country's net manufacturing exports by $6.1 billion a year. Similarly, a carbon tax that unilaterally increases energy prices by 10 percent in the European Union could reduce European Union-wide net manufacturing exports by 1.9 percent annually. 2017-06-05T20:57:46Z 2017-06-05T20:57:46Z 2017-05 Working Paper http://documents.worldbank.org/curated/en/984751496166477456/Energy-prices-and-international-trade-incorporating-input-output-linkages http://hdl.handle.net/10986/26948 English en_US Policy Research Working Paper;No. 8076 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa European Union South Africa |
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Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
SUBSIDIES CARBON LEAKAGES ENERGY COSTS EXPORT COMPETITIVENESS INPUT-OUTPUT LINKAGES TRADE ENERGY PRICES CROSS-SUBSIDIZATION |
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SUBSIDIES CARBON LEAKAGES ENERGY COSTS EXPORT COMPETITIVENESS INPUT-OUTPUT LINKAGES TRADE ENERGY PRICES CROSS-SUBSIDIZATION Chan, H. Ron Manderson, Edward Zhang, Fan Energy Prices and International Trade : Incorporating Input-Output Linkages |
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Africa European Union South Africa |
| relation |
Policy Research Working Paper;No. 8076 |
| description |
This paper examines the effect of energy
costs on industry export competitiveness. Most studies in
the literature use direct energy consumption (energy
consumption at the final stage of production) and domestic
energy prices to compute energy costs faced by domestic
industries. Using multi-country input-output information,
this study measures the effect of aggregate energy costs on
export performance, where aggregate energy costs include not
only direct energy costs, but also indirect energy costs
passed on through the upstream supply chain. This study
develops a theoretical trade model that incorporates
tradable intermediate goods to inform its empirical
strategy. It then estimates a reduced-form model using a
panel data for 10 manufacturing sectors in 43 countries from
1991 to 2012. The analysis finds that ignoring input-output
relationships can lead to significant over- or
underestimates of the effect of energy price shocks on
exports, depending on intermediate factor intensities and
trade relationships. Using estimated trade elasticities, the
study simulates the economic consequences of energy
cross-subsidies and carbon taxes. The results show that
energy cross-subsidies that raise energy tariffs on industry
to support lower rates for households and farmers in India
could reduce the country's net manufacturing exports by
$6.1 billion a year. Similarly, a carbon tax that
unilaterally increases energy prices by 10 percent in the
European Union could reduce European Union-wide net
manufacturing exports by 1.9 percent annually. |
| format |
Working Paper |
| author |
Chan, H. Ron Manderson, Edward Zhang, Fan |
| author_facet |
Chan, H. Ron Manderson, Edward Zhang, Fan |
| author_sort |
Chan, H. Ron |
| title |
Energy Prices and International Trade : Incorporating Input-Output Linkages |
| title_short |
Energy Prices and International Trade : Incorporating Input-Output Linkages |
| title_full |
Energy Prices and International Trade : Incorporating Input-Output Linkages |
| title_fullStr |
Energy Prices and International Trade : Incorporating Input-Output Linkages |
| title_full_unstemmed |
Energy Prices and International Trade : Incorporating Input-Output Linkages |
| title_sort |
energy prices and international trade : incorporating input-output linkages |
| publisher |
World Bank, Washington, DC |
| publishDate |
2017 |
| url |
http://documents.worldbank.org/curated/en/984751496166477456/Energy-prices-and-international-trade-incorporating-input-output-linkages http://hdl.handle.net/10986/26948 |
| _version_ |
1764462959909666816 |