INTERNATIONAL-TRADE AND ENVIRONMENTAL-QUALITY - HOW IMPORTANT ARE THELINKAGES

This paper develops a numerical general equilibrium model of the world economy with local and global environmental externalities. The model is then used to investigate the relationship between trade and the env ironment. Our results suggest that international trade has little impa ct on environmental quality. Furthermore, the magnitude of the welfare effects of environmental policies is not significantly affected by ch anges in trade policies. At the same time, the size and distribution o f the gains from trade liberalization appear to be little affected by changes in environmental policies.