The impact of environmental policy stringency on industrial productivity growth: A semi-parametric study of OECD countries

Guohua Feng, Keith McLaren, Ou Yang (), Xiaohui Zhang and Xueyan Zhao
Additional contact information
Guohua Feng: Department of Economics, University of North Texas
Ou Yang: Melbourne Institute: Applied Economic & Social Research, The University of Melbourne, https://www.findanexpert.unimelb.edu.au/display/person698324
Xiaohui Zhang: Business School, University of Exeter

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper employs a semi-parametric varying coefficient system approach to investigating the impact of environmental policy stringency on a nation's productivity growth using data for a panel of OECD countries over a period of two decades. A new cross-country proxy of environmental policy stringency is employed. Our results show that while stricter environmental policies might shift a country's total cost in production upward, for countries which have already adopted relatively more stringent environmental policies, further increasing their policy stringency seems to enhance these countries' productivity in the long run. We also find that more stringent environmental policies seem to render a country's use of intermediate inputs more inelastic to their own prices and decrease the substitutability between labour and intermediate inputs in the long run. We argue that more stringent environmental policies would exert tighter control over the use of several intermediate inputs such as energy, raw materials, pollution-intensive services etc, leading to the use of these inputs being less sensitive to changes in their market prices. Tighter control over the use of these intermediate inputs would also render them less of a substitute to labour input.

Keywords: environmental policy stringency; productivity growth; semi-parametric varying coefficient system; OECD countries (search for similar items in EconPapers)
JEL-codes: C14 D24 Q58 (search for similar items in EconPapers)
Pages: 39pp
Date: 2019-11
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://melbourneinstitute.unimelb.edu.au/__data/a ... 237843/wp2019n16.pdf (application/pdf)

Related works:
Journal Article: The impact of environmental policy stringency on industrial productivity growth: A semi-parametric study of OECD countries (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2019n16

Access Statistics for this paper

More papers in Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Sheri Carnegie ().