Abstract
Many countries are adopting carbon pricing policies like carbon taxes and/or carbon cap and trade to address climate change. This paper answers two research questions within this context - what is the impact of carbon policies on the economic growth-carbon emissions nexus? And, does adoption of carbon pricing policies by a country result in an increased incentive to re-locate carbon intensive activities to other countries viz. the so-called 'pollution haven effect'? Results suggest that cap and trade policies significantly reduce energy use per capita and mitigate carbon emissions. Global cap and trade policies are significantly associated with higher economic growth in offshore manufacturing destinations but carbon taxes in adopting nations do not impel a similar effect. Neither type of carbon policy has a significant impact on energy use per capita and carbon intensity in top manufacturing destination countries. Our findings thus do not support a pollution haven effect.
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