International Trade Summer School : Program content

by Anne-Celia Disdier

This module will first review the issues at stake and the data sources for exploring the multifaceted relationship between international trade and the environment/climate change. The second part will study how recent empirical developments in international trade (gravity estimates) can be used for investigating environmental issues, such as the effects of environmental provisions included in preferential trade agreements.

Structure

• Part 1: Introduction: Issues at stake and data sources
• Part 2: Relating empirical developments in international trade to the environment: Environmental provisions in trade agreements

Selected key references

• Abman R., Lundberg C. & Ruta M., 2024, “The Effectiveness of Environmental Provisions in Regional Trade Agreements”, Journal of the European Economic Association, 22(6), pp 2507-2548.
• Brandi C. & Morin J.F., 2024, Trade and the environment: drivers and effects of environmental provisions in trade agreements, Earth System Governance Elements Series, Cambridge University Press.
• Cherniwchan J., Copeland B. & Taylor M. S., 2017, “Trade and the environment: New methods, measurement, and results”, Annual Reviews of Economics, 9(1), pp 59-85.
• Copeland B. R., 2011, “Trade and the environment”, in Bernhofen D., Falvey R., Greenaway D. & Kreickemeier U., Palgrave Handbook of International Trade, Palgrave Macmillan, pp. 423-496.
• Copeland B. R., Shapiro J. S. & Taylor M. S., 2022, “Globalization and the Environment”, in Gopinath G., Helpman E. & Rogoff K., Handbook of International Economics, North Holland.
• Monteiro J. A. & Trachtman J. P., 2020, “Environmental laws”, in Handbook of Deep Trade Agreements, Mattoo A., Rocha N. & Ruta M., World Bank.

by Farid Farrokhi

This course reviews tools and insights from the trade literature to address the challenges that climate change poses to the international community. We first introduce a general equilibrium model of international trade, extended to account for international carbon supply chains and government policies. Next, we use variations of this framework to analyze how trade policy can mitigate climate change, with particular emphasis on how it can be leveraged in the design of international climate agreements. Lastly, we extend the model to include land-use dynamics and examine how trade integration impacts deforestation.

Structure

• Part 1: A Model of International Trade with Carbon Supply Chains and Government Policies
• Part 2: Linking Trade and Climate Policy
  • Unilateral Climate Policy and Climate Clubs
  • Embedding Carbon Pricing into Existing Trade Agreements
• Part 3: Impacts of Trade Policy on Global Deforestation

Selected key references (access the full list)

• Farrokhi F. & Lashkaripour A., 2025, “Can Trade Policy Mitigate Climate Change?”.
• Farrokhi F. & Lashkaripour A., 2024, “Can Trade Policy Help Combat Climate Change?”, Econofact.
• Farrokhi F. & Lashkaripour A. & Taheri H., 2025, “A Framework for Integrating Climate Policy into Trade Agreements”.
• Farrokhi F, Kang E., Pellegrina H. & Sotelo S., 2024, “Deforestation: A Global and Dynamic Perspective”.
• Farrokhi F. & Pellegrina H., 2023, “Trade, technology, and agricultural productivity”, Journal of Political Economy.

by Lionel Fontagné

In this module, participants will learn how climate policies and international trade issues interact, and how this interaction can be modelled in general equilibrium. Particular attention will be paid to the issue of carbon leakage, its identification, and the question of competitiveness in the context of the problem of collective climate action at the international level.

Structure

• Part 1: Climate action, carbon leakages and the rationale for border carbon adjustments
• Part 2: Nationally Determined Contributions, the European Green Deal, and the CBAM – a computable general equilibrium assessment

Selected key references

• Aichele R. & Felbermayr G., 2015, “Kyoto and carbon leakage: an empirical analysis of the carbon content of bilateral trade”, Review of Economics and Statistics, 97(1), pp 104-15.
• Bellora C. & Fontagné L., 2023, “EU in Search of a Carbon Border Adjustment Mechanism”, Energy Economics, 123(C).
• Böhringer C. et al., 2022, “Potential impacts and challenges of border carbon adjustments”, Nature Climate Change, 12, pp 22-29.
• Copeland B., Shapiro J. & Taylor S., 2022, “Globalization and the environment”, in Gopinath G., Helpman E. & Rogoff K., Handbook of International Economics, 5, Elsevier, pp 61-146.
• Fontagné L. & Schubert K., 2023, “The Economics of Border Carbon Adjustment: Rationale and Impacts of Compensating for Carbon at the Border”, Annual Review of Economics, 15(1), pp 389-424.

by Julian Hinz

This module explores the relationship between international trade and transportation, emphasizing the associated environmental impacts. It also highlights recent empirical advancements in international trade, particularly with respect to modern estimation techniques of structural gravity models. Participants will gain insights into how transportation costs influence trade patterns, the environmental consequences of trade-related transportation, and the application of advanced econometric methods in trade analysis.

Structure

• Part 1: Trade, International Transportation, and Transport-Related Pollution
• Part 2: Recent Empirical Developments in International Trade

Selected key references

• Ganapati S., Wong W. F. & Ziv O., 2024, “Entrepôt: Hubs, Scale, and Trade Costs”, American Economic Journal: Macroeconomics, 16(4), pp 239-278.
• Ganapati S. & Wong W. F., 2023, “How Far Goods Travel: Global Transport and Supply Chains from 1965–2020”, Journal of Economic Perspectives, 37(3), pp 3-30.
• Wong W. F. & Fuchs S., 2023, Multimodal Transport Networks, CEPR Working Paper DP19531.
• Allen T. & Arkolakis C., 2022, “The Welfare Effects of Transportation Infrastructure Improvements”, The Review of Economic Studies, 89(6), pp 2911-2957.
• Hinz J. & Brockhaus C., 2024, Navigating Shocks: The Ripple Effects of Shipping Route Closures, mimeo.
• Shapiro J. S., 2016, “Trade Costs, CO₂, and the Environment”, American Economic Journal: Economic Policy, 8(4), pp 220-254.
• Yotov Y. V., Piermartini R. & Larch M., 2016, An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model, WTO iLibrary.
• Hinz J., Stammann A. & Wanner J., 2021, State Dependence and Unobserved Heterogeneity in the Extensive Margin of Trade, CEPA Discussion Papers N°36.
• Nagengast A. & Yotov Y. V., Staggered Difference-in-Differences in Gravity Settings: Revisiting the Effects of Trade Agreements, CESifo Working Paper N°10782.

by Mathieu Parenti

This module explores new quantitative trade models and their application in assessing global environmental policies. You will learn how these models can evaluate the effectiveness and economic impact of environmental regulations across borders. The second part integrates theoretical models with empirical research to analyse how environmental regulations influence firm behaviour in open, imperfectly competitive markets.

Structure

• Part 1 (Macro) – New quantitative trade models (NQTMs) and the international taxation of carbon emissions
  • New Quantitative Trade Models 
  • NQTM augmented with environmental externalities and applications
  • International carbon taxation: beyond CBAM and climate clubs
• Part 2 (Micro) Environmental regulation: a firm-level perspective
  • Heterogeneous firms, market power and carbon taxes (theory)
  • Firm-level impact on pollution; the impact of environmental regulations on trade: empirical evidence on leakage (empirics)

Selected key references

• Campolmi A. et al., 2024, Designing Effective Carbon Border Adjustment with Minimal Information Requirements: Theory and Empirics.
• Cherniwchan J., Copeland B. R. & Taylor M. S., 2017, “Trade and the Environment: New Methods, Measurements, and Results”, Annual Review of Economics, 9, pp 59-85.
• Costinot A. & Rodríguez-Clare A., 2014, “Trade Theory with Numbers: Quantifying the Consequences of Globalization”, in Gopinath G., Helpman E. & Rogoff K., Handbook of International Economics, 4, Elsevier, pp. 197-261.
• Parenti M. & Zucman G., 2025, An economic analysis of extra-territorial taxation.
• Shapiro J. S., 2016, “Trade Costs, CO2, and the Environment”, American Economic Journal: Economic Policy, 8(4), pp 220-254.
• Shapiro J. S., 2021, “The Environmental Bias of Trade Policy”, Quarterly Journal of Economics, 136(2), pp 831-886.
• Tanaka S., Teshima K. & Verhoogen E., 2022, “North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling”, American Economic Review: Insights, 4(3), pp 271-288.