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Environmental performance and institutions quality in Europe: A Bayesian model averaging approach

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  • Canepa, Alessandra
  • Dima, Bodgan

Abstract

In this paper, we examine the relationship between institutional quality and environmental performance using a Bayesian Model Averaging framework. This approach allows us to define model weights as posterior probabilities, which are consistent across a large number of specified models. Consequently, the methodology enables us to explore the impact of various cofactors that also contribute to the environmental performance of EU countries. Our findings indicate that different aspects of democracy, access to information, the creation and dissemination of knowledge, renewable energy consumption, health expenditures, and financial stability are among the most significant explanatory variables for environmental protection performance in European Union countries. Additionally, we identify at least three groups of countries within the European Union when the most relevant environmental protection variables are used to characterize member countries’ profiles. Our results appear robust to the selection of different prior distributions for regression coefficients.

Suggested Citation

  • Canepa, Alessandra & Dima, Bodgan, 2026. "Environmental performance and institutions quality in Europe: A Bayesian model averaging approach," The North American Journal of Economics and Finance, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:ecofin:v:83:y:2026:i:c:s1062940826000112
    DOI: 10.1016/j.najef.2026.102591
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    Keywords

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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • 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
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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