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Does environmental policy stringency foster innovation and productivity in OECD countries?

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  • Morales-Lage, Rafael
  • Bengochea-Morancho, Aurelia
  • Martínez-Zarzoso, Inmaculada

Abstract

In this paper we use panel data models and quantile regressions to test the "weak" and "strong" versions of the Porter hypothesis, using data from 14 OECD countries over the period 1990-2011. A newly-released environmental policy stringency index (EPS) provided by the OECD is used as an indicator of the stringency of environmental regulations in order to tackle endogeneity issues of proxies used in earlier research. The findings indicate that more stringent environmental regulations positively influence R&D expenditure, the number of patent applications and total factor productivity (TFP). The results show that environmental stringency has a positive effect on R&D, mainly for the lower quantiles (0.10, 0.25) of the distribution of R&D, whereas for the number of patent applications and total factor productivity, the effect increases for the highest quantiles (0.75, 0.90) of the distribution of the targeted indicators.

Suggested Citation

  • Morales-Lage, Rafael & Bengochea-Morancho, Aurelia & Martínez-Zarzoso, Inmaculada, 2016. "Does environmental policy stringency foster innovation and productivity in OECD countries?," Center for European, Governance and Economic Development Research Discussion Papers 282, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:282
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    References listed on IDEAS

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    1. repec:eee:tefoso:v:129:y:2018:i:c:p:176-184 is not listed on IDEAS
    2. repec:eee:energy:v:164:y:2018:i:c:p:1286-1297 is not listed on IDEAS

    More about this item

    Keywords

    environmental regulations; Porter hypothesis; OECD; innovation; quantile regression;

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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