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Identifying Reduced-Form Relations with Panel Data

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Author Info

  • Herman R.J. Vollebergh

    ()
    (Faculty of Economics, Erasmus Universiteit Rotterdam)

  • Bertrand Melenberg

    ()
    (Dept. of Economics, Tilburg University, and CentER)

  • Elbert Dijkgraaf

    ()
    (Erasmus Universiteit Rotterdam, Tinbergen Institute, and SEOR-ECRi)

Abstract

The literature that tests for U-shaped relationships using panel data, such as those between pollution and income or inequality and growth, reports widely divergent (parametric and non-parametric) empirical findings. We explain why lack of identification lies at the root of these differences. To deal with this lack of identification, we propose an identification strategy that explicitly distinguishes between what can be identified on the basis of the data and what is a consequence of subjective choices due to a lack of identification. We apply our methodology to the pollution-income relationship of both CO2- and SO2-emissions. Interestingly, our approach yields estimates of both income (scale) and time (composition and/or technology) effects for these reduced-form relationships that are insensitive to the required subjective choices and consistent with theoretical predictions.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-072/3.

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Date of creation: 17 Sep 2007
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Handle: RePEc:dgr:uvatin:20070072

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Web page: http://www.tinbergen.nl

Related research

Keywords: Identification; Panel Data; Reduced-Form (Semi-)Parametric Estimation; Emission-Income Relationships;

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References

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  1. Stengos, T. & Millimet, D.L. & List, J.A., 2002. "The Environmental Kuznets Curve: Real Progress or Misspecified Models?," Working Papers 2002-13, University of Guelph, Department of Economics and Finance.
  2. James J. Heckman, 2000. "Causal Parameters And Policy Analysis In Economics: A Twentieth Century Retrospective," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 45-97, February.
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  10. Azomahou, Theophile & Laisney, Francois & Nguyen Van, Phu, 2006. "Economic development and CO2 emissions: A nonparametric panel approach," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1347-1363, August.
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  12. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
  13. James Andreoni & Arik Levinson, 1998. "The Simple Analytics of the Environmental Kuznets Curve," NBER Working Papers 6739, National Bureau of Economic Research, Inc.
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  15. List, John A. & Gallet, Craig A., 1999. "The environmental Kuznets curve: does one size fit all?," Ecological Economics, Elsevier, vol. 31(3), pages 409-423, December.
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  17. Manski, Charles F., 2000. "Identification problems and decisions under ambiguity: Empirical analysis of treatment response and normative analysis of treatment choice," Journal of Econometrics, Elsevier, vol. 95(2), pages 415-442, April.
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Citations

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Cited by:
  1. David I.Stern, 2009. "Between estimates of the environmental Kuznets curve," Environmental Economics Research Hub Research Reports 0934, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  2. Hanley, Nicholas & Turner, Karen, 2010. "Energy Efficiency, Rebound Effects and the Environmental Kuznets Curve," Stirling Economics Discussion Papers 2010-17, University of Stirling, Division of Economics.
  3. Leitão, Alexandra, 2010. "Corruption and the environmental Kuznets Curve: Empirical evidence for sulfur," Ecological Economics, Elsevier, vol. 69(11), pages 2191-2201, September.
  4. Stern, David I., 2010. "Between estimates of the emissions-income elasticity," Ecological Economics, Elsevier, vol. 69(11), pages 2173-2182, September.
  5. Jean-Thomas Bernard & Michael Gavin & Lynda Khalaf & Marcel Voia, 2011. "The Environmental Kuznets Curve: Tipping Points, Uncertainty and Weak Identification," Cahiers de recherche CREATE 2011-4, CREATE.
  6. Massimiliano Mazzanti & Antonio Musolesi, 2010. "Carbon Abatement Leaders and Laggards Non Parametric Analyses of Policy Oriented Kuznets Curves," Working Papers 2010.149, Fondazione Eni Enrico Mattei.
  7. Melenberg, B. & Vollebergh, H.R.J. & Dijkgraaf, E., 2011. "Grazing the Commons: Global Carbon Emissions Forever?," Discussion Paper 2011-020, Tilburg University, Center for Economic Research.
  8. Zhao, Xiaobing, 2011. "The Economic Cost of CO2 Emission Cuts," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103413, Agricultural and Applied Economics Association.
  9. Rosa Duarte & Vicente Pinilla & Ana Serrano, 2012. "Is there an environmental Kuznets curve for water use? A panel smooth transition regression approach," Documentos de Trabajo dt2012-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  10. Massimiliano Mazzanti & Antonio Musolesi, 2011. "Income and time related effects in EKC," Working Papers 201105, University of Ferrara, Department of Economics.
  11. Marzio Galeotti & Matteo Manera & Alessandro Lanza, 2009. "On the Robustness of Robustness Checks of the Environmental Kuznets Curve Hypothesis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(4), pages 551-574, April.
  12. Massimiliano Mazzanti & Antonio Musolesi, 2012. "Breaking Environmental Kuznets Curves. Evaluating Energy and Policy Time Events Effects on CO2 Trends for Advanced Countries," Working Papers 201214, University of Ferrara, Department of Economics.
  13. You, Jing, 2013. "China's challenge for decarbonized growth: Forecasts from energy demand models," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 652-668.

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