These conclusions rely however on our assumption that factor endowments and technology remain fixed when trade frictions fall. If further trade spurs capital accumulation or if trade brings knowledge spillovers and hastens technological progress then other calculations must come into play. Whether these trade-induced changes bring about a net improvement in the environment will depend quite delicately on their estimated size since our estimates indicate that they have opposing effects on pollution concentrations.
There is a burgeoning empirical literature linking openness to growth and technology adoption and we have nothing new to add here. But clearly our estimates together with input from these other sources might provide another method for assessing trade’s full impact.
While the balance of our evidence suggests that freer trade is more likely to be good rather than bad for the environment, this conclusion is subject to several provisos. Our work has several strong maintained assumptions that may be false. As well, our data is not perfect, and it is important to emphasize that the pollutant we study – sulfur dioxide – is but one of many pollutants that may be affected by trade. Clearly much more work could and should be done along these lines.
And while we are reasonably confident in our analysis some readers may want further analysis. In order to meet these demands we present a series of sensitivity tests in Appendix B. In this appendix we investigate whether our findings are robust to: changes in the dependent variable (mean, median, 95%, etc.); other transformations of the dependent variable (Box-Cox, linear); the inclusion of unrestricted time dummies; the inclusion of resource endowments and the real price of energy; changes in the time period of the analysis; and changes in the estimation procedure to allow for the simultaneous determination of both income and pollution levels.
Overall the results in Appendix B are surprisingly similar to those presented in the text. The main features of our analysis remain intact: the technique effect remains surprisingly strong in relation to the scale effect, and our trade intensity interactions retain their sign and significance levels. Electronic Payday Loans Online