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Output and pollution abatement in a U.S. state emission function

Published online by Cambridge University Press:  21 June 2019

Neophyta Empora ,
Theofanis P. Mamuneas  and
Thanasis Stengos
Neophyta Empora
Affiliation:
Department of Economics, University of Cyprus, Nicosia, Cyprus
Theofanis P. Mamuneas
Affiliation:
Department of Economics, University of Cyprus, Nicosia, Cyprus
Thanasis Stengos*
Affiliation:
Department of Economics and Finance, University of Guelph, Ontario, Canada
*
*Corresponding author. Email: [email protected]
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Abstract

Using U.S. state-level data for the period 1973–1994, this study models the relationship between emissions, output and pollution abatement by defining an emissions function, in a manner that is consistent with the residual (emissions) generation mechanism and firms' optimizing behavior. It thus accounts for factors that were previously unaccounted for or addressed only individually. Applications using this comprehensive setting can offer more informed insights for policy-making, something that is particularly useful for developing countries that face the environmental degradation that comes together with the benefits of economic growth. Using nonparametric econometric techniques as well as threshold regression, the empirical results show that there is a positive nonlinear relationship between emissions and output, rejecting an inverted-U type of relationship between the two (the Environmental Kuznets Curve, or EKC). In the absence of abatement the relationship turns around, verifying the arguments in the literature that abatement is one of the driving forces for an EKC to emerge.

Keywords

Environmental Kuznets Curveemissionspollution abatementresidual generation mechanismsemiparametric estimationthreshold regressionQ50Q52Q53
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Special Issue 1: The Economics of Climate Change and Sustainability (Part B) , February 2020 , pp. 44 - 65
Copyright
Copyright © Cambridge University Press 2019

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