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An empirical analysis of the economic impact of air pollution

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  • Edward Mateosian

Abstract

We attempt to record the imprint of air pollution on economic growth and vice versa, the tendency of economic growth on air pollution. The variables examined in our study are the Particulate Matter Lower than 2.5 micro, GDP per capita, GDP per working hour, Unemployment, Part of the budget for the health sector, Expenditures for medical care, Average annual temperature and Average annual precipitation. The databases used are OECD and World Bank and the data consist of OECD countries. After specification tests, the methodology consists of three specifications to produce robust results and to compare them consistently: panel data with fixed, random and pooled OLS, Difference and System GMM estimators, and the augmented mean value (AMG) estimator. The result is ambiguous as in some cases pollution seems to have a positive relationship with economic growth and in other cases their relationship is negative. On the contrary, the economic product always has a positive effect on air pollution.

Suggested Citation

  • Edward Mateosian, 2023. "An empirical analysis of the economic impact of air pollution," EERI Research Paper Series EERI RP 2023/03, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2023_03
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    More about this item

    Keywords

    Air pollution; economic growth; augmented mean value estimator; panel data.;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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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