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Regime switching and the shape of the emission-income relationship


  • Aslanidis, Nektarios
  • Xepapadeas, Anastasios


We explore the idea of regime switching as a new methodological approach in the analysis of the emission-income relationship. We formalize the idea by using a simple static model of profit maximization where above a threshold income level a more stringent environmental policy could induce a decreasing emission-income relationship. At the empirical level we estimate such a regime switching model and we estimate an inverse-V-shaped emission-income relationship for ambient concentrations of SO2 and smoke. We estimate thresholds which can be viewed as turning points, and which occur at reasonable values.

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  • Aslanidis, Nektarios & Xepapadeas, Anastasios, 2008. "Regime switching and the shape of the emission-income relationship," Economic Modelling, Elsevier, vol. 25(4), pages 731-739, July.
  • Handle: RePEc:eee:ecmode:v:25:y:2008:i:4:p:731-739

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    3. Giovanis, Eleftherios, 2013. "Environmental Kuznets curve: Evidence from the British Household Panel Survey," Economic Modelling, Elsevier, vol. 30(C), pages 602-611.
    4. Palivos, Theodore & Varvarigos, Dimitrios, 2017. "Pollution Abatement As A Source Of Stabilization And Long-Run Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 21(03), pages 644-676, April.
    5. Fakhri, Issaoui & Hassen, Toumi & Wassim, Touili & Bilel, Ammouri, 2016. "The Dynamic effects of Time, Health and of Well-being on the Pollution after the earth summit of Johunburg," MPRA Paper 69318, University Library of Munich, Germany.
    6. Neophyta Empora, 2017. "Air pollution spillovers and U.S. state productivity growth," University of Cyprus Working Papers in Economics 06-2017, University of Cyprus Department of Economics.
    7. Neophyta Empora & Theofanis P. Mamuneas & Thanasis Stengos, 2017. "Output and Pollution Abatement in a U.S. State Emission Function," University of Cyprus Working Papers in Economics 05-2017, University of Cyprus Department of Economics.
    8. Jian Chai & Limin Xing & Quanying Lu & Ting Liang & Kin Keung Lai & Shouyang Wang, 2016. "The Non-Linear Effect of Chinese Financial Developments on Energy Supply Structures," Sustainability, MDPI, Open Access Journal, vol. 8(10), pages 1-21, October.
    9. Fakhri, Issaoui & Hassen, Toumi & Wassim, Touili & Bilel, Ammouri, 2016. "The Dynamic effects of Time, Health and of Well-being on the Pollution after the earth summit of Johunburg," MPRA Paper 80702, University Library of Munich, Germany.

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