Lessons from Quantile Panel Estimation of the Environmental Kuznets Curve

18 Pages Posted: 9 Sep 2009

See all articles by Carlos A. Flores

Carlos A. Flores

University of Miami

Alfonso Flores-Lagunes

Syracuse University--Economics; Syracuse University--CPR; IZA, Bonn

Dimitris Kapetanakis

University of Florida - Food & Resource Economics Department

Date Written: August 20, 2009

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 finding 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 fixed effects 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

JEL Classification: Q56, C21, C23

Suggested Citation

Flores, Carlos A. and Flores-Lagunes, Alfonso and Kapetanakis, Dimitris, Lessons from Quantile Panel Estimation of the Environmental Kuznets Curve (August 20, 2009). Available at SSRN: https://ssrn.com/abstract=1469791 or http://dx.doi.org/10.2139/ssrn.1469791

Carlos A. Flores

University of Miami ( email )

Coral Gables, FL 33124
United States

Alfonso Flores-Lagunes (Contact Author)

Syracuse University--Economics ( email )

Syracuse, NY 13244-1020
United States

HOME PAGE: http://www.maxwell.syr.edu/econ/cpr/Alfonso_Flores_Lagunes/

Syracuse University--CPR ( email )

Syracuse, NY 13244
United States

HOME PAGE: http://www.maxwell.syr.edu/econ/cpr/Alfonso_Flores_Lagunes/

IZA, Bonn ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/profile?key=2305

Dimitris Kapetanakis

University of Florida - Food & Resource Economics Department ( email )

P.O. Box 110249
Gainesville, FL 32611-0249
United States

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