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Economic Growth and Environmental Regulations: A Simultaneous Equation Estimation

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  • Chali Nondo
  • Peter V Schaeffer

Abstract

: This study employs a four-equation regional growth model to examine the simultaneous relationships among changes in population, employment, per capita income, and environmental regulations for the 420 counties in Appalachia. The results reveal that initial conditions for environmental regulations are negatively related to regional growth factors of change in population, per capita income, and total employment. From this, it is inferred that the diversion of resources from production and investment activities to pollution abatement is inadvertently transmitted to other sectors of the economy, thereby resulting in a slowdown of regional growth. It also finds robust evidence that shows that changes in environmental regulations positively influence changes in population, total employment and per capita income. Thus, it is parsimoniously concluded that in the long run, environmental regulations are not detrimental to economic growth.

Suggested Citation

  • Chali Nondo & Peter V Schaeffer, 2012. "Economic Growth and Environmental Regulations: A Simultaneous Equation Estimation," The IUP Journal of Applied Economics, IUP Publications, vol. 0(4), pages 28-49, October.
    • Handle: RePEc:icf:icfjae:v:11:y:2012:i:4:p:28-49
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    Cited by:

    1. Yang, Qiuyue & Song, Deyong, 2019. "How does environmental regulation break the resource curse: Theoretical and empirical study on China," Resources Policy, Elsevier, vol. 64(C).
    2. Veasna Kheng & Sizhong Sun & Sajid Anwar, 2017. "Foreign direct investment and human capital in developing countries: a panel data approach," Economic Change and Restructuring, Springer, vol. 50(4), pages 341-365, November.
    3. Jin, Jangik & Rafferty, Peter, 2017. "Does congestion negatively affect income growth and employment growth? Empirical evidence from US metropolitan regions," Transport Policy, Elsevier, vol. 55(C), pages 1-8.

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