Earth Community Organization (ECO)
the Global Community
for Discussion Roundtables 4, 7, 8, 9, 11, 22, 26, 32 and 54
Table of Contents|
An Explanation for the Observed SO2 - GNP Relationship in the U.S. Economy (1900-1990): Combining Environmental Kuznets Curve Theory with Evidence
Empirical evidence reveals that SO2 and GNP tend to follow an Environmental Kuznets Curve (EKC) relationship in the U.S. over the period 1900-1990. The purpose of this paper is to explain this observation by combining economic theory with real-world evidence. A competitive Ramsey growth-pollution model is developed in order to analyze the role that 'scale', 'technique', and government 'regulation' effects play in explaining the EKC. Functional forms are specified, calibrations are employed, and the artificial economy is simulated over time. The results are compared to the real world data concerning GNP and SO2 in the U.S. economy. Findings reveal that technology and government regulations play fundamental roles in determining whether an EKC relationship exists between these two variables. Pareto-improving policies are investigated and findings reveal that the historical path of SO2 is sub-optimal.
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