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Climate Change and Economic Growth: The Role of Environmental Policy Stringency

Author

Listed:
  • Enrico Maria de Angelis

    (ESOMAS Department, University of Torino; 10124 Torino, Italy)

  • Marina Di Giacomo

    (ESOMAS Department, University of Torino; 10124 Torino, Italy)

  • Davide Vannoni

    (ESOMAS Department, University of Torino; 10124 Torino, Italy
    Collegio Carlo Alberto, 10122 Torino, Italy)

Abstract

The paper investigates the relationship between economic growth and environmental quality in the context of the Kuznets curve, which foresees that growth, while initially causing negative externalities for the environment, eventually can be seen also as the solution to environmental degradation. The novelty of the paper is to analyze the role of environmental policies, and in particular the use of market-based and non-market instruments to challenge the pollution plague and mitigate climate change. The results of fixed effects estimates on a sample of 32 countries observed for the period 1992–2012 show the existence of an inverted U-shaped relationship between per capita gross domestic product (GDP) and per-capita CO 2 emissions for the quadratic specification, as well as of an N-shaped pattern for the cubic specification. Most importantly, the stringency indexes, i.e., the proxies used to account for environmental regulation, exhibit negative and strongly significant coefficients, suggesting that the policies are effective in reducing environmental damages associated with economic growth.

Suggested Citation

  • Enrico Maria de Angelis & Marina Di Giacomo & Davide Vannoni, 2019. "Climate Change and Economic Growth: The Role of Environmental Policy Stringency," Sustainability, MDPI, vol. 11(8), pages 1-15, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:8:p:2273-:d:223053
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    References listed on IDEAS

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