Does international trade promote CO2 emission performance? An empirical analysis based on a partially linear functional-coefficient panel data model

Abstract

Abstract International trade plays a crucial role in the national economy and thus has a profound impact on CO2 emissions. Moreover, it is widely acknowledged that improving CO2 emission performance is one of the best approaches to reduce CO2 emissions. Previous studies have explored the impact of international trade on CO2 emission performance. A particularly interesting question is how different income levels among global economies shape the relationship between international trade and CO2 emission performance. Using a panel dataset including 116 economies during the period 1986–2014, this paper introduces a partially linear functional-coefficient panel data model to examine the impact of international trade on CO2 emission performance. We find that there is a nonlinear relationship between international trade and CO2 emission performance. The effect of international trade on CO2 emission performance depends on different income levels. When the income level is below 16,883.45 US dollars, international trade tends to hinder CO2 emission performance. Then the effect becomes insignificant when the income level is between 16,883.45 US dollars and 33,766.90 US dollars. With an increase in income, international trade becomes conducive to the improvement of CO2 emission performance, and the magnitude of its marginal effect also increases with income growth.