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Lessons from Quantile Panel Estimation of the Environmental Kuznets Curve

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Author Info

  • Carlos A. Flores

    ()
    (Department of Economics, University of Miami)

  • Alfonso Flores-Lagunes

    ()
    (Food and Resource Economics Department, University of Florida and IZA, Bonn, Germany)

  • Dimitrios Kapetanakis

    ()
    (Food and Resource Economics Department, Universty of Florida)

Abstract

The environmental Kuznets curve (EKC) hypothesizes that the income-pollution rela- tionship has an inverted U shape: pollution increases with income up to a turning point beyond which it decreases. The empirical literature has concentrated on estimation of this relationship at the mean employing longitudinal data, with the typical ?nding supporting the inverted U shape. Conditional mean estimation, however, can mask heterogeneities present at higher and/or lower quantiles of the emissions?distribution, in addition to being more sensitive to the presence of outliers. We apply methods for conditional-quantile panel ?xed e¤ects models to the estimation of the income-pollution relationship on U.S. state-level data on NOx (nitrogen oxide) and SO2 (sulfur dioxide) pollutants over the period 1929- 1994. Our results indicate that conditional mean methods provide too optimistic estimates about emissions reduction of NOx, as conditional-quantile methods suggest that the turning point of the relationship occurs at higher values of income; while the opposite is found for SO2. Another important lesson drawn is that the income-pollution relationship is sensitive to the presence of outliers in the data.

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Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2010-4.

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Length: 18 pages
Date of creation: Aug 2009
Date of revision:
Publication status: Published
Handle: RePEc:mia:wpaper:2010-4

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Keywords: Environmental Kuznets Curve; Panel Quantile Estimation; Income and the Environment;

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References

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  1. William Harbaugh & Arik Levinson & David Wilson, 2000. "Reexamining the Empirical Evidence for an Environmental Kuznets Curve," NBER Working Papers 7711, National Bureau of Economic Research, Inc.
  2. Hettige, Hemamala & Lucas, Robert E B & Wheeler, David, 1992. "The Toxic Intensity of Industrial Production: Global Patterns, Trends, and Trade Policy," American Economic Review, American Economic Association, vol. 82(2), pages 478-81, May.
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  7. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
  8. Daniel L. Millimet & John A. List & Thanasis Stengos, 2003. "The Environmental Kuznets Curve: Real Progress or Misspecified Models?," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1038-1047, November.
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  14. Kelly, David L., 2003. "On environmental Kuznets curves arising from stock externalities," Journal of Economic Dynamics and Control, Elsevier, vol. 27(8), pages 1367-1390, June.
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  18. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October.
  19. Sherry Bartz & David L. Kelly, 2006. "Economic Growth and the Environment: Theory and Facts," Working Papers 0601, University of Miami, Department of Economics.
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  21. Chen, Songnian & Khan, Shakeeb, 2008. "Semiparametric Estimation Of Nonstationary Censored Panel Data Models With Time Varying Factor Loads," Econometric Theory, Cambridge University Press, vol. 24(05), pages 1149-1173, October.
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Citations

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Cited by:
  1. Javier Alejo, 2012. "Relación de Kuznets en América Latina. Explorando más allá de la media condicional," CEDLAS, Working Papers 0129, CEDLAS, Universidad Nacional de La Plata.
  2. Javier Alejo, 2013. "Relación de Kuznets en América Latina. Explorando más allá de la media condicional," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 59, pages 3-55, January-D.

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