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Growth and the pollution convergence hypothesis: a nonparametric approach

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Author Info
Carlos Ordás Criado () (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)
Simone Valente () (Center of Economic Research CER, Department of Management, Technology and Economics, ETH Zurich, Switzerland)
Thanasis Stengos (Department of Economics, University of Guelph, Guelph, ON, Canada)

Additional information is available for the following registered author(s):

Abstract

The pollution-convergence hypothesis is formalized in a neoclassical growth model with optimal emissions reduction: pollution growth rates are positively correlated with output growth (scale effect) but negatively correlated with emission levels (defensive effect). This dynamic law is empirically tested for two major and regulated air pollutants - nitrogen oxides (NOX) and sulfur oxides (SOX) - with a panel of 25 European countries spanning over years 1980-2005. Traditional parametric models are rejected by the data. However, more flexible regression techniques - semiparametric additive specifications and fully nonparametric regressions with discrete and continuous factors - confirm the existence of the predicted positive and defensive effects. By analyzing the spatial distributions of per capita emissions, we also show that cross-country pollution gaps have decreased over the period for both pollutants and within the Eastern as well as the Western European areas. A Markov modeling approach predicts further cross-country absolute convergence, in particular for SOX. The latter results hold in the presence of spatial non-convergence in per capita income levels within both regions.

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Publisher Info
Paper provided by CEPE Center for Energy Policy and Economics, ETH Zürich in its series CEPE Working paper series with number 09-66.

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Length: 41 pages
Date of creation: Sep 2009
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Handle: RePEc:cee:wpcepe:09-66

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Related research
Keywords: Air pollution; convergence; economic growth; mixed nonparametric regressions; distribution dynamics;

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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