Dipankor Coondoo

Causality between income and emission: a country group-specific econometric analysis

Abstract Empirical studies of the Environmental Kuznets Curve (EKC) examine the presence or otherwise of an inverted U-shaped relationship between the level of pollution and the level of income. Customarily, in the diagram of EKC the level of income is shown on the horizontal axis and that of pollution on the vertical axis. Thus, it is presumed that the relationship between income and pollution is one of unidirectional causality with income causing environmental changes and not vice versa. The validity of this presumption is now being questioned. It is being asserted that the nature and direction of causality may vary from one country to the other. In this paper, we present the results of a study of income–CO 2 emission causality based on a Granger causality test to cross-country panel data on per capita income and the corresponding per capita CO 2 emission data. Briefly, our results indicate three different types of causality relationship holding for different country groups. For the developed country groups of North America and Western Europe (and also for Eastern Europe) the causality is found to run from emission to income. For the country groups of Central and South America, Oceania and Japan causality from income to emission is obtained. Finally, for the country groups of Asia and Africa the causality is found to be bi-directional. The regression equations estimated as part of the Granger causality test further suggest that for the country groups of North America and Western Europe the growth rate of emission has become stationary around a zero mean, and a shock in the growth rate of emission tends to generate a corresponding shock in the growth rate of income. In contrast, for the country groups of Central and South America, Oceania and Japan a shock in the income growth rate is likely to result in a corresponding shock in the growth rate of emission. Finally, causality being bi-directional for the country groups of Asia and Africa, the income and the emission growth rates seemed to reinforce each other.

Air quality and economic growth: an empirical study

Abstract In the present empirical study, we have observed an inverse (and sometimes U-shaped) relationship between environmental degradation and per capita real income as opposed to the inverted U-shaped environmental Kuznets curve (EKC) found in many earlier studies. It was felt that a possible explanation of the observed pattern of relationship might be sought in the dynamics of the process of economic growth experienced by the countries concerned. Thus, e.g. economic development may strengthen the market mechanism as a result of which the economy may gradually shift from non-market to marketed energy resources that are less polluting. This phenomenon may show up in the form of an inverse relationship, as mentioned above. Also, due to the global technical progress the production techniques available to the countries all over the world are becoming more and more capital intensive and at the same time less polluting. This may mean that, given the income level, the pollution level decreases as the capital intensity of an economy rises. In the present study, it is indeed observed that as capital intensity increases the level of suspended particulate matter (spm) in the atmosphere decreases. Per capita real income is also found to be inversely related to spm partially, but the interaction effect of per capita income and capital-intensity on spm is observed to be positive. This suggests that, given the level of per capita income (capital intensity), a more capital intensive production technique (a higher per capita income level) would cause less pollution. For spm a surprising result is also obtained, i.e. a U-turn is observed at a very high level of per capita real income (i.e. ∼US

ESTIMATING SPATIAL CONSUMER PRICE INDICES THROUGH ENGEL CURVE ANALYSIS

12 500 at 1985 US prices). This is possibly indicative of the fact that there are technological limits to industrial pollution control such that beyond a threshold level of income further rise in income cannot be achieved without environmental degradation.

A System of Demand Equations Based on Price Independent Generalized Linearity

In this paper we propose a method of estimating spatial multilateral price index numbers from cross-section consumer expenditure data on different items using Engel curve analysis. The novelty of the procedure is that it overcomes the problem of data inadequacy, a problem that is shared by most of the developing countries. The procedure does not require item-specific price/unit value data and price index numbers can be calculated from consumer expenditure data grouped by per capita income/total consumer expenditure class in a situation where unit level data are not available. To illustrate the method, we use published state-specific data of the 50th round (1993-94) and 55th round (1999-2000) consumer expenditure surveys of Indias National Sample Survey Organization (NSSO) and calculate the spatial consumer price index numbers for 15 major states of India, with All-India taken as base, separately for the rural and the urban sector for each round.

Components of volatility and their empirical measures: a note

This paper proposes a static demand system of the Price Independent Generalized Linearity (PIGL) class of J. Muellbauer. The primary motivation for this is to use the plausible nonlinear income responses displayed by the PIGL in empirical analysis. The performance of the proposed system is compared empirically with those of the Almost Ideal Demand Sy stem and a modification of the simple Nonadditive model of A. S. Deaton. The results bring out the in-adequacies of the PIGL specifications in capturing fully the nonlinearity of income responses implicit in the repeated cross-sectional Ind ian consumption data used in the empirical work. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

District-level poverty estimation: a proposed method

A descriptive decomposition of the observed volatility of a variable into three components is proposed here. These components have been named the Strength, Duration and Persistence of volatility. This decomposition is unique and is such that measurement and analysis of these components will facilitate both a better understanding of the nature of volatility of a variable and, more importantly, a comparison of the patterns of volatility of two or more variables. The proposed methodology is illustrated here by applying it to the time series of daily observations on three variables, viz., stock return, inter-bank call money rate and foreign institutional investment, pertaining to India.

Demand Threshold, Zero Expenditure and Hierarchical Model of Consumer Demand

This paper develops a method of estimating micro-level poverty in cases where data are scarce. The method is applied to estimate district-level poverty using the household level Indian national sample survey data for two states, viz., West Bengal and Madhya Pradesh. The method involves estimation of state-level poverty indices from the data formed by pooling data of all the districts (each time excluding one district) and multiplying this poverty vector with a known weight matrix to obtain the unknown district-level poverty vector. The proposed method is expected to yield reliable estimates at the district level, because the district-level estimate is now based on a much larger sample size obtained by pooling data of several districts. This method can be an alternative to the “small area estimation technique” for estimating poverty at sub-state levels in developing countries.

Econometrics of yield spreads in the money market: a note

Consumer expenditure surveys often show households reporting zero consumption of some commodities. Three reasons for this are recognized in the literature: (i) infrequency of purchase, (ii) a strong brand preference for differentiated products and (iii) misreporting. However, sometimes the number of households reporting zero consumption is seen to decline with income. To capture this phenomenon, which does not fall into any of the categories mentioned above, we propose a hierarchical preference structure and identify a class of recursive utility functions representing this structure. An empirical illustration based on Indian consumer expenditure data is provided.

Multiple representative consumers

The literature on bond markets and interest rates has focused largely on the term structure of interest rates, specifically, on the so-called expectations hypothesis. At the same time, little is known about the nature of the spread of the interest rates in the money market beyond the fact that such spreads are generally unstable. However, with the evolution of complex financial instruments, it has become imperative to identify the time series process that can help one accurately forecast such spreads into the future. This article explores the nature of the time series process underlying the spread between three-month and one-year US rates, and concludes that the movements in this spread over time is best captured by a GARCH(1,1) process. It also suggests the use of a relatively long term measure of interest rate volatility as an explanatory variable. This exercise has gained added importance in view of the revelation that GARCH based estimates of option prices consistently outperform the corresponding estimates based on the stylized Black-Scholes algorithm.

Socio-economic Well-being—Impact of Wider Highways on the Rural Poor Living in Proximity

Abstract This paper extends Muellbauers (1975) notion of consistent aggregation of consumer demand through a single representative consumer to the case of multiple representative consumers, and obtains the condition for the representative total expenditures to be independent of prices.