Lessons from Quantile Panel Estimation of the Environmental Kuznets Curve

Carlos Flores (), Alfonso Flores-Lagunes () and Dimitrios Kapetanakis ()
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Carlos Flores: Department of Economics, University of Miami
Dimitrios Kapetanakis: Food and Resource Economics Department, University of Florida

No 2010-4, Working Papers from University of Miami, Department of Economics

Abstract: The environmental Kuznets curve (EKC) hypothesizes that the income-pollution relationship has an inverted U shape: pollution increases with income up to a turning point beyond which it decreases. The empirical literature has concentrated on estimation of this relationship at the mean employing longitudinal data, with the typical ?nding supporting the inverted U shape. Conditional mean estimation, however, can mask heterogeneities present at higher and/or lower quantiles of the emissions?distribution, in addition to being more sensitive to the presence of outliers. We apply methods for conditional-quantile panel ?xed e¤ects models to the estimation of the income-pollution relationship on U.S. state-level data on NOx (nitrogen oxide) and SO2 (sulfur dioxide) pollutants over the period 1929- 1994. Our results indicate that conditional mean methods provide too optimistic estimates about emissions reduction of NOx, as conditional-quantile methods suggest that the turning point of the relationship occurs at higher values of income; while the opposite is found for SO2. Another important lesson drawn is that the income-pollution relationship is sensitive to the presence of outliers in the data.

Keywords: Environmental Kuznets Curve; Panel Quantile Estimation; Income and the Environment (search for similar items in EconPapers)
JEL-codes: C21 C23 Q56 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2009-08
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Lessons From Quantile Panel Estimation of the Environmental Kuznets Curve (2014)
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