The Impact of Institutions on Economic and Environmental Performance: Evidence From Europe

Panteli Maria () and Delipalla Sofia ()
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Panteli Maria: PhD, Post-doctoral Researcher in Economics, Department of Balkan, Slavic and Oriental Studies, School of Economics and Regional Studies, University of Macedonia, 156 Egnatia Street, GR-546 36, Thessaloniki, Greece
Delipalla Sofia: PhD, Professor of Economics, Department of Balkan, Slavic and Oriental Studies, School of Economics and Regional Studies, University of Macedonia, Thessaloniki, Greece

South East European Journal of Economics and Business, 2022, vol. 17, issue 2, 125-141

Abstract: Within the Environmental Kuznets Curve framework, we investigate whether the effect of institutions on environmental quality differs among the Western Balkans, the other European post-socialist states, and Western Europe. We estimate both direct and indirect effects of institutions on air pollution for each respective sub-sample and for the whole European region (45 countries during 1996-2014). The negative direct effect is greater for non-post-socialist states, compared to post-socialist ones. Regarding the indirect effect, improving the quality of economic institutions induces an increase in the scale of economic activity, leading to an increase in CO2 emissions per capita. Estimated elasticities of CO2 emissions with respect to institutions, for all sub-groups, uncover a total positive effect, which is larger for Central-eastern and South-eastern European states. Improving the quality of institutions should go hand in hand with stricter formation and implementation of policies designed to decouple economic growth from CO2 emissions.

Keywords: Environmental quality; carbon dioxide (CO2) emissions; institutional quality; corruption; economic performance; Europe (search for similar items in EconPapers)
JEL-codes: D02 Q01 Q53 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:seejeb:v:17:y:2022:i:2:p:125-141:n:10

DOI: 10.2478/jeb-2022-0019

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