Environmental Engineering Reference
In-Depth Information
A fourth type of model included trade variables and per capita income
as independent variables, commonly using a quadratic form equation.
Examples of trade variables are export or import manufacturing ratio,
commerce intensity and prices for goods, such as wood or steel (Cropper
and Grii ths, 1994; Cole et al., 1997; Suri and Chapman, 1998; Kaufmann
et al., 1998):
E
it
5 b
0
1 b
1
y
it
1 b
2
(
y
it
)
2
+
b
3
T
it
1 e
it
;
Quadratic
where:
E
5 environmental indicator;
y
5 per capita income;
T
5 trade variable;
b 5 parameter to be estimated;
t
5 time trend;
e 5 error term.
A i fth type of model used institution variables in addition to per capita
income, mostly using a linear form equation. Examples of institution vari-
ables were political rights and civil freedom and macro-policy variables,
such as proportion of indebtedness to GDP and black market premium
on the exchange rate (Torras and Boyce, 1998; Bhattarai and Hammig,
2001):
Linear
E
it
5 b
0
1 b
1
y
it
1 b
2
I
it
+
b
3
M
it
1 e
it
;
where:
E
5 environmental indicator;
y
5 per capita income;
I
5 institutions related variable;
M
5 macro-policy related variable;
b 5 parameter to be estimated;
t
5 time trend;
e 5 error term.
The last and more comprehensive type of models included policy vari-
ables in addition to population density, growth and per capita income as
independent variables, applying a cubic form equation (Panayotou,
1997):
E
it
5 b
0
1 b
1
(
y
it
) 1 b
2
(
y
it
)
2
+
b
3
(
y
it
)
3
1 b
4
(
P
it
)
Cubic
1 b
5
(
P
it
)
2
1 b
6
(
P
it
)
3
1 b
7
(
g
it
) 1 b
8
(
g
it
) (
y
it
)
1 b
9
(
p
it
) 1 b
10
(
p
it
) (
y
it
) 1 e
it
;
