Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-20T15:20:55.378Z Has data issue: false hasContentIssue false
  • English
  • Français

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]
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D., Johnson, S., and Robinson, J.A. (2001), ‘The colonial origins of comparative development: an empirical investigation’, American Economic Review 91: 1369–1401.CrossRefGoogle Scholar
Aghion, P. and Howitt, P. (1998), ‘Capital accumulation and innovation as complementary factors in long-run growth’, Journal of Economic Growth 3: 111–130.Google Scholar
Anand, S. and Kanbur, S.M.R. (1993), ‘Inequality and development: a critique’, Development Economics 41: 19–43.CrossRefGoogle Scholar
Ang, B.W. (1999), ‘Decomposition methodology in energy demand and environmental analysis’, in van den Bergh, J.C.J.M. (ed.), Handbook of Environmental and Resource Economics, Cheltenham: Edward Elgar Publishers.Google Scholar
Antweiler, W., Copeland, B.R., and Taylor, M.S. (2001), ‘Is free trade good for the environment?’, American Economic Review 91: 877–908.CrossRefGoogle Scholar
Arrow, K., Bolin, B., Costanza, R., Dasgupta, P., Folke, C., Holling, C.S., Jansson, B.-O., Levin, S., Mäler, K.-G., Perrings, C., and Pimentel, D. (1995), ‘Economic growth, carrying capacity, and the environment’, Science 268: 520–521.CrossRefGoogle ScholarPubMed
Barrett, S. and Graddy, K. (2000), ‘Freedom, growth, and the environment’, Environment and Development Economics 5: 433–456.CrossRefGoogle Scholar
Barro, R.J. (1990), ‘Government spending in a simple model of endogenous growth’, Journal of Political Economy 98: S103–S125.CrossRefGoogle Scholar
Barro, R.J. and Lee, J.-W. (2000), ‘International data on educational attainment: updates and implications’, CID Working Paper No. 42.Google Scholar
Begun, J. and Eicher, T.S. (2007), ‘In search of a sulphur dioxide environmental Kuznets curve: a Bayesian model averaging approach’, University of Washington Working Paper UWEC 2007–18.Google Scholar
Bovenberg, A.L. and Smulders, S. (1995), ‘Environmental quality and pollution-saving technological change in a two-sector endogenous growth model’, Journal of Public Economics 57: 369–391.CrossRefGoogle Scholar
Brock, W.A. and Taylor, M.S. (2005), ‘Economic growth and the environment: a review of theory and empirics’, in Aghion, P. and Durlauf, S.N. (eds), Handbook of Economic Growth, Volume 1B, Amsterdam: Elsevier.Google Scholar
Burnham, K.P. and Anderson, D.R. (2002), Model Selection and Multimodel Inference: A Practical–Theoretic Approach, 2nd edn, New York: Springer-Verlag.Google Scholar
Constantini, V. and Martini, C. (2007), ‘A modified environmental Kuznetz curve for sustainable development assessment using panel data’, FEEM Working Paper 148.CrossRefGoogle Scholar
Copeland, B.R. and Taylor, M.S. (2003), Trade and the Environment: Theory and Evidence, Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Cropper, M. and Griffith, C. (1994), ‘The interaction of population growth and environmental quality’, American Economic Review 84: 250–254.Google Scholar
Dasgupta, S., Laplante, B., Wang, H., and Wheeler, D. (2002), ‘Confronting the environmental Kuznets curve’, Journal of Economic Perspectives 16: 147–168.CrossRefGoogle Scholar
De Groot, H.L.F., Minliang, Z., and Withagen, C.A. (2004), ‘The dynamics of China's regional development and pollution: an empirical investigation into the existence of an environmental Kuznets curve for China’, Environment and Development Economics 9: 507–537.CrossRefGoogle Scholar
De la Fuente, A. and Doménech, R. (2001), ‘Schooling data, technological diffusion, and the neoclassical model’, American Economic Review 91: 323–327.CrossRefGoogle Scholar
De la Fuente, A. and Doménech, R. (2006), ‘Human capital in growth regressions: how much difference does data quality make?’, Journal of the European Economic Association 4: 1–36.CrossRefGoogle Scholar
Deacon, R.T. and Norman, C.S. (2006), ‘Does the environmental Kuznets curve describe how individual countries behave?’, Land Economics 82: 291–315.CrossRefGoogle Scholar
Dijkgraaf, E. and Vollebergh, H. (2005), ‘A test for parameter homogeneity in CO2 panel EKC estimations’, Environment and Resource Economics 32: 229–239.CrossRefGoogle Scholar
Draper, D. (1995), ‘Assessment and propagation of model uncertainty (with discussion)’, Journal of the Royal Statistical Society, Series B 57: 45–97.Google Scholar
Eicher, T.S., Papageorgiou, C., and Raftery, A.E. (2007)a, ‘Bayesian model averaging in economics’, Working Paper.Google Scholar
Eicher, T.S., Papageorgiou, C., and Roehn, O. (2007)b, ‘Unraveling the fortunes of the fortunate: an iterative Bayesian model averaging (IBMA) approach’, Journal of Macroeconomics 29: 494–514.CrossRefGoogle Scholar
Farnsworth, M.L., Hoeting, J.A., Hobbs, N.T., and Miller, M.W. (2006), ‘Linking chronic wasting disease to mule deer movement scales: a hierarchical Bayesian approach’, Ecological Applications 16: 1026–1036.CrossRefGoogle Scholar
Fernández, C., Ley, E., and Steel, M.F.J. (2001), ‘Model uncertainty in cross-country growth regressions’, Journal of Applied Econometrics 16: 563–576.CrossRefGoogle Scholar
Fernández, C., Ley, E., and Steel, M.F.J. (2002), ‘Bayesian modeling of catch in a north-west Atlantic fishery’, Journal of the Royal Statistical Society: Series C 51: 257–280.Google Scholar
Goklany, I. (2002), ‘Comparing twentieth century trends in US and global agricultural water and land use’, Water International 27: 321–329.CrossRefGoogle Scholar
Grossman, G.M. and Krueger, A.B. (1993), ‘Environmental impacts of a North American free trade agreement,’ in Garber, P.M. (ed.), The US–Mexico Free Trade Agreement, Cambridge, MA: MIT Press, pp. 13–56.CrossRefGoogle Scholar
Grossman, G.M. and Krueger, A.B. (1995), ‘Economic growth and the environment’, Quarterly Journal of Economics 110: 353–377.CrossRefGoogle Scholar
Harbaugh, W.T., Levinson, A., and Wilson, D.M. (2002), ‘Reexamining the empirical evidence for an environmental Kuznets curve’, Review of Economics and Statistics 83: 541–551.CrossRefGoogle Scholar
Hendry, D.F. and Krolzig, H.-M. (2001), Automatic Econometric Model Selection Using PcGets, London: Timberlake Consultants Press.Google Scholar
Heston, A., Summers, R., and Aten, B. (2002), Penn World Table Version 6.1, Center for International Comparisons at the University of Pennsylvania (CICUP), http://pwt.econ.upenn.edu/php_site/pwt_index.php.Google Scholar
Hjort, N.L. and Claeskens, G. (2003), ‘Frequentist model average estimators’, Journal of the American Statistical Association 98: 879–899.CrossRefGoogle Scholar
Hoekstra, R. and Van den Bergh, J.C.J.M. (2002), ‘Structural decomposition analysis of physical flows in the economy’, Environmental and Resource Economics 23: 357–378.CrossRefGoogle Scholar
Hoeting, J.A. (1994), ‘Accounting for model uncertainty in linear regression’, University of Washington Ph.D. dissertation.Google Scholar
Hoeting, J.A., Madigan, D., Raftery, A.E., and Volinsky, C.T. (1999), ‘Bayesian model averaging: a tutorial’, Statistical Science 14: 382–417.Google Scholar
Hsiao, C. (1986), Analysis of Panel Data, Econometric Society Monographs No. 11, Cambridge: Cambridge University Press.Google Scholar
Jaggers, K. and Gurr, T.R. (1995), ‘Polity III: regime change and political authority, 1800–1994’, http://privatewww.essex.ac.uk/~ksg/Polity.html.CrossRefGoogle Scholar
Jeffreys, H. (1961), Theory of Probability, 3rd edn, Oxford: The Clarendon Press.Google Scholar
Jones, L.E. and Manuelli, R.E. (2001), ‘Endogenous policy choice: the case of pollution and growth’, Review of Economic Dynamics 4: 369–405.CrossRefGoogle Scholar
Kass, R.E. and Raftery, A.E. (1995), ‘Bayes factors’, Journal of the American Statistical Association 90: 773–795.CrossRefGoogle Scholar
Kass, R.E. and Wasserman, L. (1995), ‘A reference Bayesian test for nested hypotheses and its relationship to the Schwartz criterion’, Journal of the American Statistical Association 90: 928–934.CrossRefGoogle Scholar
Knack, S. and Keefer, P. (1995), ‘Institutions and economic performance: cross-country tests using alternative institutional measures’, Economics and Politics 7: 207–227.CrossRefGoogle Scholar
Koop, G. and Tole, L. (2006), ‘An investigation of thresholds in air pollution–mortality effects’, Environmental Modelling and Software 21: 1662–1673.CrossRefGoogle Scholar
Krueger, A.B. and Lindahl, M. (2001), ‘Education for growth: why and for whom?’, Journal of Economic Literature 39: 1101–1136.CrossRefGoogle Scholar
Kuznets, S. (1955), ‘Economic growth and income inequality’, American Economic Review 45: 1–28.Google Scholar
Leamer, E. (1978), Specification Searches, New York: Wiley.Google Scholar
Leamer, E. (1983), ‘Let's take the con out of econometrics’, American Economic Review 73: 31–43.Google Scholar
Leitão, A. (2006), ‘Corruption and the environmental Kuznets curve: empirical evidence for sulfur’, Working Paper, Universidade Católica Portuguesa.Google Scholar
List, J.A. and Gallet, C.A. (1999), ‘The environmental Kuznets curve: does one size fit all?’, Ecological Economics 31: 409–424.CrossRefGoogle Scholar
Madigan, D. and Raftery, A.E. (1994), ‘Model selection and accounting for model uncertainty in graphical models using Occam's window’, Journal of the American Statistical Association 89: 1535–1546.CrossRefGoogle Scholar
Marshall, M.G. and Jaggers, K. (2003), ‘Polity IV Project: Political Regime Characteristics and Transitions, 1800–2003’, http://www.cidcm.umd.edu/inscr/polity/.Google Scholar
Martinez-Zarzoso, I. and Bengochea-Morancho, A. (2004), ‘Pooled mean group esti-mation for an environmental Kuznets curve for CO2’, Economics Letters 82: 121–126.CrossRefGoogle Scholar
Miller, A.J. (1984), ‘Selection of subsets of regression variables (with discussion)’, Journal of the Royal Statistical Society Series A 147: 389–425.CrossRefGoogle Scholar
Miller, A.J. (1990), Subset Selection in Regression, New York: Chapman & Hall.CrossRefGoogle Scholar
Millimet, D.L., List, J.A., and Stengos, T. (2003), ‘The environmental Kuznets curve: real progress or misspecified models?’, Review of Economics and Statistics 85: 1038–1047.CrossRefGoogle Scholar
Mundlak, Y. (1978), ‘On the pooling of time series and cross section data’, Econometrica 46: 69–85.CrossRefGoogle Scholar
Panayotou, T. (1993), ‘Empirical tests and policy analysis of environmental degradation at different stages of economic development’, Working Paper WP238, Technology and Employment Programme, International Labor Office, Geneva.Google Scholar
Panayotou, T. (1995), ‘Environmental degradation at different stages of economic development’, in Ahmed, I. and Doeleman, J.A. (eds), Beyond Rio: The Environmental Crisis and Sustainable Livelihoods in the Third World, London: Macmillan, pp. 13–36.CrossRefGoogle Scholar
Panayotou, T. (1997), ‘Demystifying the environmental Kuznets curve: turning a black box into a policy tool’, Environment and Development Economics 2: 465–484.CrossRefGoogle Scholar
Perman, R. and Stern, D.I. (2003), ‘Evidence from panel unit root and cointegration tests that the environmental Kuznets curve does not exist’, Australian Journal of Agricultural and Resource Economics 47: 325–347.CrossRefGoogle Scholar
Raftery, A.E. (1993), ‘Bayesian model selection in structural equation models’, in Bollen, K.A. and Long, J.S. (eds), Testing Structural Equation Models, Beverly Hills: Sage, pp. 163–180.Google Scholar
Raftery, A.E. (1995), ‘Bayesian model selection in social research (with discussion)’, Sociological Methodology 25: 111–196.CrossRefGoogle Scholar
Raftery, A.E. (1996), ‘Approximate Bayes factors and accounting for model uncertainty in generalized linear models’, Biometrika 83: 251–266.CrossRefGoogle Scholar
Raftery, A.E. and Zheng, Y. (2003), ‘Long-run performance of Bayesian model averaging’, Journal of the American Statistical Association 98: 931–938.CrossRefGoogle Scholar
Roberts, J. and Grimes, P. (1997), ‘Carbon intensity and economic development 1962–91: a brief exploration of the environmental Kuznets curve’, World Development 25: 191–198.CrossRefGoogle Scholar
Rock, M.T. (1998), ‘Freshwater use, freshwater scarcity, and socioeconomic development’, Journal of Environment and Development 7: 278–301.CrossRefGoogle Scholar
Sala-i-Martin, X.X. (1997), ‘I just ran two million regressions’, American Economic Review 87: 178–183.Google Scholar
Sala-i-Martin, X.X., Doppelhoffer, G., and Miller, R. (2004), ‘Determinants of long-term growth: a Bayesian averages of classical estimates (BACE) approach’, American Economic Review 94: 813–835.CrossRefGoogle Scholar
Selden, T.M. and Song, D. (1994), ‘Environmental quality and development: is there a Kuznets curve for air pollution?’, Journal of Environmental Economics and Environmental Management 27: 147–162.CrossRefGoogle Scholar
Shafik, N. and Bandyopadhyay, S. (1992), ‘Economic growth and environmental quality’, World Bank Policy Research Working Paper WPS 904.Google Scholar
Smulders, S., Bretschger, L., and Egli, H. (2005), ‘Economic growth and the diffusion of clean technologies: explaining environmental Kuznets curves’, Economics Working Paper Series, Working Paper 05/42, WIF – Institute of Economic Research.CrossRefGoogle Scholar
Stern, D.I. (2002), ‘Explaining changes in global sulfur emissions: an econometric decomposition approach’, Ecological Economics 42: 201–220.CrossRefGoogle Scholar
Stern, D.I. (2004), ‘The rise and fall of the environmental Kuznets curve’, World Development 32: 1419–1439.CrossRefGoogle Scholar
Stern, D.I. (2005), ‘Beyond the environmental Kuznets curve: diffusion of sulfur emissions abating technology’, Journal of Environment and Development 14: 101–124.CrossRefGoogle Scholar
Stern, D.I., Common, M.S., and Barbier, E.B. (1996), ‘Economic growth and environmental degradation: the environmental Kuznets curve and sustainable development’, World Development 24: 1151–1160.CrossRefGoogle Scholar
Stokey, N.L. (1998), ‘Are there limits to growth?’, International Economic Review 39: 1–31.CrossRefGoogle Scholar
Torras, M. and Boyce, J. (1998), ‘Income, inequality, and pollution: a reassessment of the environmental Kuznets curve’, Ecological Economics 25: 147–160.CrossRefGoogle Scholar