International Trade and Carbon Emissions: Evaluating the Role of Trade Rule Uncertainty

Abstract

Based on textual data mining methods and global English articles, we develop an index for measuring the uncertainty of international trade rules and evaluating the role of trade rule uncertainty in the relationship between international trade and carbon emissions, via a mediating effect model. The empirical results show that: (1) Increasing trade volume in developing countries contributes to a rise in trade rule uncertainty, which in turn triggers trade conflicts and even trade wars between countries. (2) There are significant correlations between international trade and carbon emissions, and international trade impacts carbon emissions in both direct and indirect ways. (3) Trade rule uncertainty plays a mediating role in the relationship between international trade and carbon emissions. (4) Trade rule uncertainty significantly impacts carbon emissions in most developed and developing countries, but the impact is not significant in the USA. Our work not only contributes to extending measurements of uncertainty but also helps to quantify the impacts of trade rule uncertainty on carbon emissions.