Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307673 
Year of Publication: 
2024
Series/Report no.: 
wiiw Working Paper No. 254
Publisher: 
The Vienna Institute for International Economic Studies (wiiw), Vienna
Abstract: 
This paper employs a quantitative trade model to globally assess the implications of the EU carbon border adjustment mechanism (CBAM) on trade flows, welfare, real wages and CO2 emissions. We quantify the general equilibrium effects on EU members and non-members under various carbon tax prices, including a sector-level composition, and also compare the results to a scenario including export rebates. For the EU, we find an increase in the terms of trade and, consequently, small positive welfare effects, although there are tiny negative effects on real wages. Non-EU countries face a decline in the terms of trade and a small welfare loss as well as marginally declining real wages. Global CO2 emissions are marginally reduced, but they slightly increase in the EU due to specialisation effects.
Subjects: 
New quantitative trade model
carbon border adjustment mechanism (CBAM)
trade policy welfare
CO2 emissions
JEL: 
F11
F13
F14
F18
Q56
Document Type: 
Working Paper

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