Abstract
Several recent papers propose competing theoretical explanations for the empirical observation of an inverted U-shape relationship between environmental degradation and per-capita income. We propose the following test of the theory: calibrate a theoretical model to an already developed economy using information unrelated to the pollution-income curve. Then simulate the model starting from a less developed initial condition and compare the predicted pollution-income relationship with that in the data. Our results are mixed. Some support exists for the theory that the inverted U-shape results from a corner solution in which less developed countries do not abate pollution. However, because we find abatement is relatively inexpensive, the model predicts pollution peaks at a level of per capita income much lower than that observed in our U.S. data. For some pollutants, we find evidence of a structural break in preferences in the early 1970s. When the structural break is added, the model performs better for two of three pollutants.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 115-149 |
| Number of pages | 35 |
| Journal | Resource and Energy Economics |
| Volume | 30 |
| Issue number | 2 |
| DOIs | |
| State | Published - May 1 2008 |
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Keywords
- Calibration
- Environmental Kuznets curve
- Growth environment
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Economic growth and the environment : Theory and facts. / Bartz, Sherry; Kelly, David.
In: Resource and Energy Economics, Vol. 30, No. 2, 01.05.2008, p. 115-149.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Economic growth and the environment
T2 - Theory and facts
AU - Bartz, Sherry
AU - Kelly, David
PY - 2008/5/1
Y1 - 2008/5/1
N2 - Several recent papers propose competing theoretical explanations for the empirical observation of an inverted U-shape relationship between environmental degradation and per-capita income. We propose the following test of the theory: calibrate a theoretical model to an already developed economy using information unrelated to the pollution-income curve. Then simulate the model starting from a less developed initial condition and compare the predicted pollution-income relationship with that in the data. Our results are mixed. Some support exists for the theory that the inverted U-shape results from a corner solution in which less developed countries do not abate pollution. However, because we find abatement is relatively inexpensive, the model predicts pollution peaks at a level of per capita income much lower than that observed in our U.S. data. For some pollutants, we find evidence of a structural break in preferences in the early 1970s. When the structural break is added, the model performs better for two of three pollutants.
AB - Several recent papers propose competing theoretical explanations for the empirical observation of an inverted U-shape relationship between environmental degradation and per-capita income. We propose the following test of the theory: calibrate a theoretical model to an already developed economy using information unrelated to the pollution-income curve. Then simulate the model starting from a less developed initial condition and compare the predicted pollution-income relationship with that in the data. Our results are mixed. Some support exists for the theory that the inverted U-shape results from a corner solution in which less developed countries do not abate pollution. However, because we find abatement is relatively inexpensive, the model predicts pollution peaks at a level of per capita income much lower than that observed in our U.S. data. For some pollutants, we find evidence of a structural break in preferences in the early 1970s. When the structural break is added, the model performs better for two of three pollutants.
KW - Calibration
KW - Environmental Kuznets curve
KW - Growth environment
UR - http://www.scopus.com/inward/record.url?scp=40649120135&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=40649120135&partnerID=8YFLogxK
U2 - 10.1016/j.reseneeco.2007.06.001
DO - 10.1016/j.reseneeco.2007.06.001
M3 - Article
AN - SCOPUS:40649120135
VL - 30
SP - 115
EP - 149
JO - Resources and Energy Economics
JF - Resources and Energy Economics
SN - 0928-7655
IS - 2
ER -