Regime Switching and the Shape of the
AbstractWe explore the idea of regime switching as a new methodological approach in the analysis of the emission - income relationship. We formalize the idea by using a simple static model of profit maximization where above a threshold income level a more stringent environmental policy induces a decreasing emission-income relationship. At the empirical level we estimate such a regime switching model and we find an inverse-V-shaped emission - income relationship. .Our findings are in line with the original papers in this literature. We estimate thresholds which can be viewed as turning points, and which occur at reasonable values.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0206.
Length: 15 pages
Date of creation:
Date of revision: 31 Mar 2003
Environmental Kuznets Curve; environmental policy;
Find related papers by JEL classification:
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
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