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The Level of Pollution and the Economic Growth Factor: A Nonparametric Approach to Environmental Kuznets Curve

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Abstract

This paper uses nonparametric method to study the relationship between economic growth and the level of pollution. The results indicate that as income increases the level of PM10 pollution rises and falls for low- and middle-income countries, respectively. Countries with GDP per capita above $32,000 experience an increased pollution level. Statistical tests show that nonparametric result provides better analysis than cubic specification, which dominates research works. Among the control variables in semiparametric setting, the higher the proportion of urban population, the higher is the level of pollutions while coal consumption and trade openness have no effect on PM10 pollution.

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Notes

  1. This is a direct analog to Simon Kuznets’s work on the relationship between income distribution and economic fortune of US (Kuznets 1955). EKC is an inverted U-shaped relationship between the fortune (GDP per capita) and level of environmental quality or ambient pollution level.

  2. Once \({\widehat{{\Psi }}}_{x_o } \) is obtained, the RHS of Eq. (3) or the individual functional form, \(f_t \) and \(f_{t-1} \) can be retrieved using marginal integration method described by Linton and Nielsen (1995). The choice of a kernel is determined by computational cost, simplicity and the speed of convergence of the density estimator (Pagan and Ullah 1999).

  3. The health-based national air quality standard for PM-10 is \(50\,\upmu \hbox {g/m}^{3}\) (measured as an annual mean) and \(150\, \upmu \hbox {g/m}^{3}\) (measured as a daily concentration) (EPA 2013).

  4. Plugin method was found to be superior in representing a smooth relationship between the two variables.

  5. This is based on the World Bank classification of countries (for detailed explanations refer to http://data.worldbank.org/about/country-classifications).

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The views expressed are those of the authors and do not necessarily reflect the views of the Economic Research Service or the U.S. Department of Agriculture.

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  1. Market and Trade Economics Division, Economic Research Service/USDA, Washington, DC, USA

    Getachew Nigatu

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Nigatu, G. The Level of Pollution and the Economic Growth Factor: A Nonparametric Approach to Environmental Kuznets Curve. J. Quant. Econ. 13, 147–159 (2015). https://doi.org/10.1007/s40953-015-0009-0

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