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In search of an environmental Kuznets curve in sulphur dioxideconcentrations: a Bayesian model averaging approach

Published online by Cambridge University Press:  27 August 2008

JEFFREY BEGUN  and
THEO S. EICHER
JEFFREY BEGUN
Affiliation:
University of Washington, Box 353330, Seattle, WA 98195-3330, USA. Email: [email protected]
THEO S. EICHER
Affiliation:
University of Washington, Box 353330, Seattle WA 98195-3330, USA. Email: [email protected]
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Abstract

The exact specification and motivation for an environmental Kuznets curve (EKC)is the subject of a vast literature in environmental economics. A remarkablydiverse set of econometric approaches and candidate regressors have beenproposed, which highlights the degree of model uncertainty surrounding therelationship between environmental quality and pollution. We introduce Bayesianmodel averaging (BMA) to the EKC analysis to examine: (a) whether a sulphurdioxide EKC exists, and if so (b) which income/pollution specification issupported by the data. BMA addresses model uncertainty as part of the empiricalstrategy by incorporating the uncertainty about the validity of competingtheories into the posterior distribution. We find only weak support for an EKC,which disappears altogether when we address issues relating to the extremeoversampling of two industrialized countries in the sample. In contrast, ourresults highlight the relative importance of political economy and site-specificvariables (specifically executive constraints and precipitation variation) inexplaining pollution outcomes. Trade is shown to play an important indirectrole, as it moderates the influence of the composition effect on pollution.

Type
Research Article
Information
Environment and Development Economics , Volume 13 , Issue 6: SUSTAINABLE DEVELOPMENT , December 2008 , pp. 795 - 822
Copyright
Copyright © Cambridge University Press 2008

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