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Title: A dynamic analysis of the income–pollution relationship in a two-country setting
Authors: Filippiadis, Eleftherios
Litina, Anastasia
Type: Article
Subjects: FRASCATI::Social sciences::Economics and Business::Economics
Keywords: Environmental Kuznets curve
Environmental poverty trap
TFP asymmetry
Transboundary pollutants
Issue Date: 3-May-2021
Publisher: Springer
Source: Economic Change and Restructuring
Abstract: This research explores the presence of the income–pollution relationship in a dynamic two-country setting. We argue that the initial conditions of an economy, as described by its initial stock of physical capital, its total factor productivity, and the degree of environmental awareness, are critical determinants of the income–pollution paths. More importantly, these initial conditions have a more pronounced effect in a world where economies interact with one another and transboundary and global pollutants are affecting more than one country. We show that, in the presence of pollution externalities between two countries, the income–pollution paths these countries follow depend on the stage of development of each country, on their relative and absolute productivities, on the degree of environmental awareness and on the transboundary nature of the pollutants. In a two-country setting with pollution externalities, even more complex patterns may arise compared to single country models, thereby confirming the nonlinear effect of growth on environmental outcomes. It is shown that even small asymmetries span income–pollution relationships that are significantly different than the prescribed inverted U-shaped patterns.
ISSN: 1573-9414
Other Identifiers: 10.1007/s10644-021-09328-6
Appears in Collections:Department of Economics

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