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CO 2 Emissions and Economic Development

CO 2 Emissions and Economic Development. Binta Sidibe & Amarachi Okorigbo University of Wisconsin-Superior. Introduction. Nations around the world pay high costs for their economic development Human activities cause pollution Pollution is increasing around the world

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CO 2 Emissions and Economic Development

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  1. CO2 Emissions and Economic Development BintaSidibe & AmarachiOkorigbo University of Wisconsin-Superior

  2. Introduction Nations around the world pay high costs for their economic development Human activities cause pollution Pollution is increasing around the world When would development help reduce pollution?

  3. Research Questions • Is there a relationship between pollution and the level of economic development? • If the relationship exists, what functional form characterizes it best? • Linear/monotonically increasing • Quadratic/concave

  4. Theoretical Models of Pollution IPAT Environmental Kuznets Curve Grossman and Krueger (1991) Quadratic relationship Early stages of economic development are characterized by degradation and pollution. Turning point where they begin to care more about the environment • Ehrlich and Holdren (1971) • Monotonically increasing relationship • I= Impact of human activities on the environment P= Population Size A= Affluence, measured here by RGDPPC T= Technology used to produce a unit for consumption • Stern (2003) • Curve Shifts down over time Pollution Pollution Real GDP per capita Real GDP per capita

  5. Measures of Pollution • Water and Land Pollution • Territory-specific • Air pollution • Fewer boundaries • Negative worldwide externalities of air pollution • Main Measure: CO2 Emissions

  6. Research Hypotheses • There exists a relationship between real GDP per capita and CO2 emissions • The relationship between the CO2 emissions and real GDP per capita is quadratic

  7. Data: Descriptive Statistics

  8. Data: Graph Matrix

  9. Empirical Model • If hypothesis 1 holds, β1 should be positive and statistically significant • If hypothesis 2 holds, β2 should be negative and statistically significant

  10. Empirical Model A CO2 emissions B Real GDP pc

  11. Empirical Results: Robust LSDV ***, **, * statistically significant coefficients at 1%, 5%, 10%

  12. Analysis of Results • There is a statistically significant positive relationship between the CO2 emissions and real GDP per capita • The quadratic relationship between CO2 emissions and real GDP per capita is negative and statistically significant in 3 out of 5 regressions • While there is evidence to support the Environmental Kuznets Curve theory, such evidence is not robust

  13. Analysis of Results: Regression 5 A CO2 emissions B $41,942 $83,884

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