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Country-specific environmental Kuznets curves: a random coefficient approach applied to high-income countries

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  • Eugenio Figueroa
  • Roberto Pastén

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Abstract

Cross-country estimations of the Environmental Kuznets Curve (EKC) to empirically analyze the relationship between income and pollution have generally assumed a common structure for all countries. Since this latter feature is not supported by economic theory, this paper uses the Random Coefficient Model proposed by Swamy (1970) and empirically estimates EKCs for sulfur dioxide with specific turning points from a sample of 73 high and low income countries. A crucial aspect is that there are large differences between the estimated turning points of the EKCs for the different countries in the sample, which points to the relevance of using the approach employed here since assuming a common structure for all countries erroneously hides this relevant empirical feature. Moreover, the analysis of the structure of the EKCs estimated suggests that regulatory processes resembling market mechanisms could induce the empirical emergence of EKCs. Finally, taking into consideration the most recent concerns in the literature, we econometrically checked, on the one hand, for the validity of the usual theoretical assumption of exogeneity of the per capita income variable in the EKC relationship and, on the other hand, for an eventual structural change causing the sign change in the pollution-per capita income relationship of the EKC. The weak exogeneity and the structural break test employed rendered plausible that income per capita is really the driver variable determining the EKC relationship found.

Suggested Citation

  • Eugenio Figueroa & Roberto Pastén, 2009. "Country-specific environmental Kuznets curves: a random coefficient approach applied to high-income countries," Estudios de Economia, University of Chile, Department of Economics, vol. 36(1 Year 20), pages 5-32, June.
  • Handle: RePEc:udc:esteco:v:36:y:2009:i:1:p:5-32
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    References listed on IDEAS

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    1. Blackman, Allen & Harrington, Winston, 1998. "Using Alternative Regulatory Instruments to Control Fixed Point Air Pollution in Developing Countries: Lessons from International Experience," Discussion Papers dp-98-21, Resources For the Future.
    2. Jean-Philippe Barde, 1994. "Economic Instruments in Environmental Policy: Lessons from the OECD Experience and their Relevance to Developing Economies," OECD Development Centre Working Papers 92, OECD Publishing.
    3. Arrow, Kenneth & Bolin, Bert & Costanza, Robert & Dasgupta, Partha & Folke, Carl & Holling, C.S. & Jansson, Bengt-Owe & Levin, Simon & Mäler, Karl-Göran & Perrings, Charles & Pimentel, David, 1996. "Economic growth, carrying capacity, and the environment," Environment and Development Economics, Cambridge University Press, vol. 1(01), pages 104-110, February.
    4. Andreoni, James & Levinson, Arik, 2001. "The simple analytics of the environmental Kuznets curve," Journal of Public Economics, Elsevier, vol. 80(2), pages 269-286, May.
    5. Costanza, Robert, 1995. "Economic growth, carrying capacity, and the environment," Ecological Economics, Elsevier, vol. 15(2), pages 89-90, November.
    6. Cole, M.A. & Rayner, A.J. & Bates, J.M., 1997. "The environmental Kuznets curve: an empirical analysis," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 401-416, November.
    7. Cole, Matthew A., 2003. "Development, trade, and the environment: how robust is the Environmental Kuznets Curve?," Environment and Development Economics, Cambridge University Press, vol. 8(04), pages 557-580, October.
    8. repec:ebl:ecbull:v:14:y:2005:i:1:p:1-7 is not listed on IDEAS
    9. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
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    Citations

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    Cited by:

    1. Giovanni Bella & Carla Massidda & Ivan Etzo, 2013. "A Panel Estimation of the Relationship between Income, Electric Power Consumption and CO2 Emissions," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 59(2), pages 149-166.
    2. Jean-Thomas Bernard & Michael Gavin & Lynda Khalaf & Marcel Voia, 2011. "The Environmental Kuznets Curve: Tipping Points, Uncertainty and Weak Identification," Cahiers de recherche CREATE 2011-4, CREATE.
    3. Jean-Thomas Bernard & Michael Gavin & Lynda Khalaf & Marcel Voia, 2015. "Environmental Kuznets Curve: Tipping Points, Uncertainty and Weak Identification," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 285-315, February.
    4. Mohapatra, Sandeep & Adamowicz, Wiktor & Boxall, Peter, 2016. "Dynamic technique and scale effects of economic growth on the environment," Energy Economics, Elsevier, vol. 57(C), pages 256-264.

    More about this item

    Keywords

    Environmental Kusnetz curves; random coefficients; panel unit roots;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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