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Pollution Abatement Costs and Foreign Direct Investment Inflows to U.S. States: A Nonparametric Reassessment

Daniel Henderson (daniel.henderson@ua.edu) and Daniel Millimet

No 507, Departmental Working Papers from Southern Methodist University, Department of Economics

Abstract: Keller and Levinson (2002, this Review, 84(4), 691-703) utilize state-level panel data on inflows of foreign direct investment along with an innovative measure of relative pollution abatement costs to assess the impact of environmental stringency on capital flows. Using standard parametric panel data models, the authors find moderate evidence that capital flows are sensitive to abatement costs. Using recently developed nonparametric methods, we assess the robustness of this conclusion. The nonparametric approach reveals that (i) some of the parametric results are not robust, (ii) the impact of relative abatement costs is heterogeneous across states and generally of smaller magnitude than previously suggested.Length: 15 pages

JEL-codes: C14 C33 F21 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (14)

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Journal Article: Pollution Abatement Costs and Foreign Direct Investment Inflows to U.S. States: A Nonparametric Reassessment (2007) Downloads
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