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Introducing Institutional Variables In The Environmental Kuznets Curve (Ekc): A Latin American Study

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  • ITALO ARBULÚ VILLANUEVA Author-Workplace-Name: Málaga-Webb & Asociados
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    Abstract

    Several studies have examined the relationship between environmental degradation and per capita income. However, most of them did not take into account institutional quality and just focused on macroeconomic determinants. The purpose of this paper is to fill this gap in the literature by assessing the effects on the Environmental Kuznets Curve (EKC) when institutional quality variables are introduced, especially those related to corruption and rent-seeking behavior. This study considers 18 Latin American economies and panel data for 1998–2005. A standard reducedform modeling approach with pool estimation was employed and, in order to introduce the heterogeneity of the different countries, three different models were estimated. The first model corresponds to the basic Environmental Kuznets Curve (Basic Model), the second model introduced a sets of additional economic variables (Extended Model Nº 1), and finally, the third one introduced institutional variables into the previous formulation (Extended Model Nº 2). The expected results from this investigation lead us to support the EKC hypothesis while confirming the importance of improvements in political institutions and governance for better environmental performances in the region.

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    Bibliographic Info

    Article provided by Constantin Brancusi University, Faculty of Economics in its journal Constatin Brancusi University of Targu Jiu Annals - Economy Series.

    Volume (Year): 1 (2012)
    Issue (Month): (March)
    Pages: 71-81

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    Handle: RePEc:cbu:jrnlec:y:2012:v:1:p:71-81

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    Keywords: Environmental Kuznets Curve; Institutions; Corruption;

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    1. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
    2. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    3. Deacon, Robert & Mueller, Bernardo, 2004. "Political Economy and Natural Resource Use," University of California at Santa Barbara, Economics Working Paper Series qt68g1n1v8, Department of Economics, UC Santa Barbara.
    4. Lopez, Ramon & Mitra, Siddhartha, 2000. "Corruption, Pollution, and the Kuznets Environment Curve," Journal of Environmental Economics and Management, Elsevier, vol. 40(2), pages 137-150, September.
    5. Torras, Mariano & Boyce, James K., 1998. "Income, inequality, and pollution: a reassessment of the environmental Kuznets Curve," Ecological Economics, Elsevier, vol. 25(2), pages 147-160, May.
    6. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
    7. William Nilsson, 2008. "Spousal Income and Sick Leave: What do Twins Tell us About Causality?," Journal of Family and Economic Issues, Springer, vol. 29(3), pages 407-426, September.
    8. Stern, David I. & Common, Michael S. & Barbier, Edward B., 1996. "Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development," World Development, Elsevier, vol. 24(7), pages 1151-1160, July.
    9. Brajer, Victor & Mead, Robert W. & Xiao, Feng, 2008. "Health benefits of tunneling through the Chinese environmental Kuznets curve (EKC)," Ecological Economics, Elsevier, vol. 66(4), pages 674-686, July.
    10. Fredriksson, Per G. & Svensson, Jakob, 2003. "Political instability, corruption and policy formation: the case of environmental policy," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1383-1405, August.
    11. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
    12. Culas, Richard J., 2007. "Deforestation and the environmental Kuznets curve: An institutional perspective," Ecological Economics, Elsevier, vol. 61(2-3), pages 429-437, March.
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