Lessons from Quantile Panel Estimation of the Environmental Kuznets Curve
AbstractThe 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 InfoPaper provided by University of Miami, Department of Economics in its series Working Papers with number 2010-4.
Length: 18 pages
Date of creation: Aug 2009
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Environmental Kuznets Curve; Panel Quantile Estimation; Income and the Environment;
Find related papers by JEL classification:
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-27 (All new papers)
- NEP-ENE-2009-11-27 (Energy Economics)
- NEP-ENV-2009-11-27 (Environmental Economics)
- NEP-RES-2009-11-27 (Resource Economics)
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