An analysis of global environmental policy using Stata

Sergio Colin Castillo
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Sergio Colin Castillo: Universidad Autónoma de Coahuila

Mexican Stata Conference 2023 from Stata Users Group

Abstract: Taking advantage of the ease offered by Stata in the xtivreg and qregpd routines implemented by Sharma and Mishra (2022), this presentation analyzes a group of OECD countries, with emphasis on Mexico and North America. Two approaches to economic theory are used: Neoclassical and evolutionary. Two models are used: fixed-effects data panel (PE) with instrumental variables (IV) and the quantile model for data panel. Porter's hypothesis (greater environmental regulation leads to greater innovation and therefore greater competitiveness) has been a controversial topic since its appearance in the 90s. Studies have tried to prove or disprove it with different results: depending on factors such as the available data, the variables, the methodology used, and the level at which the analysis is done (macro or micro). The sequence where environmental regulation influences first innovation, and then productivity deals with endogeneity and possible problems of bias and asymmetry. By using total factor productivity (TFP) and the EPS environmental stringency index created by the OECD, over a 20- year period the results show evidence in favor of Porter.

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