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Growth and Pollution Convergence: Theory and Evidence

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  • Carlos Ordás Criado

    ()
    (ETH Zurich, Center for Energy Policy and Economics (CEPE).)

  • Simone Valente

    ()
    (ETH Zurich, Center of Economic Research (CER).)

  • Thanasis Stengos

    ()
    (University of Guelph.)

Abstract

Stabilizing pollution levels in the long run is a pre-requisite for sustainable growth. We develop a neoclassical growth model with endogenous emission reduction predicting that, along optimal sustainable paths, pollution growth rates are (i) positively related to output growth (scale effect) and (ii) negatively related to emission levels (defensive effect). This dynamic law reduces to a convergence equation that is empirically tested for two major and regulated air pollutants - sulfur oxides and nitrogen oxides - with a panel of 25 European countries spanning the years 1980-2005. Traditional parametric models are rejected by the data. More flexible regression techniques confirm the existence of both the scale and the defensive effect, supporting the model predictions.

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Bibliographic Info

Paper provided by University of Guelph, Department of Economics and Finance in its series Working Papers with number 1106.

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Length: 20
Date of creation: 2011
Date of revision:
Handle: RePEc:gue:guelph:2011-06.

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Keywords: Air pollution; convergence; economic growth; nonparametric regressions.;

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Cited by:
  1. Michele Battisti & Michael S. Delgado & Christopher F. Parmeter, 2013. "Evolution of the Global Distribution of Carbon Dioxide: A Finite Mixture Analysis," Working Papers 2013-10, University of Miami, Department of Economics.
  2. 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.
  3. Jean-Louis Combes & Pascale Combes Motel & Somlanare Romuald KINDA, 2014. "Do Environmental Policies Hurt Trade Performance?," Working Papers halshs-00939249, HAL.
  4. Massimiliano Mazzanti & Antonio Musolesi, 2013. "Nonlinearity, Heterogeneity and Unobserved Effects in the CO2-income Relation for Advanced Countries," Working Papers 2013.91, Fondazione Eni Enrico Mattei.
  5. Vasiliki Manousi & Anastasios Xepapadeas, 2013. "Mitigation and Solar Radiation Management in Climate Change Policies," Working Papers 2013.41, Fondazione Eni Enrico Mattei.
  6. Mazzanti, M. & Musolesi, A., 2013. "Nonlinearity, heterogeneity and unobserved effects in the carbon dioxide emissions-economic development relation for advanced countries," Working Papers 2013-08, Grenoble Applied Economics Laboratory (GAEL).
  7. Thomas Bassetti & Nikos Benos & Stelios Karagiannis, 2013. "CO 2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 54(1), pages 101-125, January.

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