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Environmental Policy Performance and its Determinants: Application of a three-level random intercept model

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  • Marzio Galeotti
  • Yana Rubashkina
  • Silvia Salini
  • Elena Verdolini

Abstract

We propose the use of a two level random intercept model to measure the degree of environmental policy performance of different countries and to study its determinants. Inspired by the literature on multilevel latent models and Item Response Theory (IRT), this framework treats policy commitment as a latent variable which is estimated conditional on the difficulty of the policy portfolio implemented by each country. We contribute to the study and scoring of environmental and energy policies in three main ways. First, the model results in a ranking of countries which is conditional on the complexity of their chosen policy portfolio. Second, we provide a unified framework in which to construct a policy indicator and to study its determinants through a latent regression approach. The resulting country ranking can thus be cleaned from the effect of economic and institutional observables which affect policy design and implementation. Third, the model estimates parameters which can be used to describe and compare policy portfolios across countries. We apply this methodology to the case of energy efficiency policies in the industrial sectors of 29 EU countries between 2004 and 2011. We conclude by highlighting the future possible applications of this approach, which are not confined to the realm of environmental and energy policy.

Suggested Citation

  • Marzio Galeotti & Yana Rubashkina & Silvia Salini & Elena Verdolini, 2014. "Environmental Policy Performance and its Determinants: Application of a three-level random intercept model," IEFE Working Papers 71, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
  • Handle: RePEc:bcu:iefewp:iefewp71
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    References listed on IDEAS

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    Cited by:

    1. Nicolli, Francesco & Vona, Francesco, 2019. "Energy market liberalization and renewable energy policies in OECD countries," Energy Policy, Elsevier, vol. 128(C), pages 853-867.
    2. Marzio Galeotti & Silvia Salini & Elena Verdolini, 2017. "Measuring Environmental Policy Stringency: Approaches, Validity, and Impact on Energy Efficiency," Development Working Papers 412, Centro Studi Luca d'Agliano, University of Milano.

    More about this item

    Keywords

    Energy policy; environmental policy; ranking; policy portfolios;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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