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An Empirical Analysis of the Interactions Between Environmental Regulations and Economic Growth

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Author Info

  • Chali Nondo

    ()
    (Division of Resource Management, West Virginia University)

  • Peter Schaeffer

    ()
    (Division of Resource Management, West Virginia University)

  • Tesfa Gebremedhin

    ()
    (Division of Resource Management, West Virginia University)

  • Jerald Fletcher

    ()
    (Division of Resource Management, West Virginia University)

Abstract

The purpose of this research is to examine the relationship between environmental regulation and economic growth. A four-equation regional growth model is used to analyze the simultaneous relationships among changes in population, employment, per capita income, and environmental regulations for the 410 counties in Appalachia. Our results reveal that initial conditions for environmental regulation are negatively related to regional growth factors of change in population, per capita income, and total employment. From this, we infer that the diversion of resources from production and investment activities to pollution abatement is inadvertently transmitted to other sectors of the economy—thereby resulting in a slow-down of regional growth. We also find robust evidence that show that changes in environmental regulations positively influence changes in population, total employment, and per capita income. Thus, we parsimoniously conclude that in the long-run, environmental regulations are not detrimental to economic growth.

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File URL: http://rri.wvu.edu/wp-content/uploads/2012/11/Gebremedhin_Empirical_Analysis2010-13.pdf
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Bibliographic Info

Paper provided by Regional Research Institute, West Virginia University in its series Working Papers with number 201013.

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Length: 30 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:rri:wpaper:201013

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Related research

Keywords: environmental regulations; economic growth; regional growth model; Appalachia;

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  1. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
  2. Kahn, Matthew E & Matsusaka, John G, 1997. "Demand for Environmental Goods: Evidence from Voting Patterns on California Initiatives," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 137-73, April.
  3. Regens, James L. & Seldon, Barry J. & Elliott, Euel, 1997. "Modeling compliance to environmental regulation: Evidence from manufacturing industries," Journal of Policy Modeling, Elsevier, vol. 19(6), pages 683-696, December.
  4. Simon Condliffe & O. Ashton Morgan, 2009. "The effects of air quality regulations on the location decisions of pollution-intensive manufacturing plants," Journal of Regulatory Economics, Springer, vol. 36(1), pages 83-93, August.
  5. Fredriksson, Per G. & Millimet, Daniel L., 2002. "Strategic Interaction and the Determination of Environmental Policy across U.S. States," Journal of Urban Economics, Elsevier, vol. 51(1), pages 101-122, January.
  6. Moriki Hosoe & Tohru Naito, 2006. "Trans-boundary pollution transmission and regional agglomeration effects-super-," Papers in Regional Science, Wiley Blackwell, vol. 85(1), pages 99-120, 03.
  7. List, John A., 2001. "US county-level determinants of inbound FDI: evidence from a two-step modified count data model," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 953-973, May.
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