The economic analysis of instrument variables estimation in dynamic optimal models with an application to the water consumption

He Y., Fullerton T.M. Jr. (2020): The economic analysis of instrument variables estimation in dynamic optimal models with an application to the water consumption. Agric. Econ. – Czech, 66: 413–423.

download PDF

This study examines one of the most important issues in water economic research, namely, the nexus between water consumption and economic growth. Water consumption is determined by the intersection of endogenous growth function and water consumption function, neither function can be consistently identified by comparing average quantities of water consumed at different values of observed real per capita output. The contribution of this study is an investigation of the endogenous nexus between economic output and water consumption. Water consumption function is derived using an optimal dynamic equilibrium model. Two instrument variable models are proposed with real per capita economic output specified as a function of institutional reform and urbanization, which are used to examine the nexus among water consumption, reform, urbanization, and economic growth in Guangzhou, China.

Angrist J.D., Pischke J.S. (2008): Mostly Harmless Econometrics : An Empiricist’s Companion. New Jersey, United States, Princeton University Press: 113–218.
Angrist J.D., Graddy K., Imbens G.W. (2000): The interpretation of instrumental variables estimators in simultaneous equations models with an application to the demand for fish. Review of Economic Studies, 67: 499–527.
Angrist J.D., Imbens G.W. (1995): Two-stage least squares estimation of average causal effects in models with variable treatment intensity. Journal of the American Statistical Association, 90: 431–442.
Angrist J.D., Krueger A.B. (1991): Does compulsory school attendance affect schooling and earnings? The Quarterly Journal of Economics, 106: 979–1014.
Angrist J.D., Krueger A.B. (2001): Instrumental variables and the search for identification: From supply and demand to natural experiments. Journal of Economic Perspectives, 15: 69–85.
Barbier E.B. (2004): Water and economic growth. Economic Record, 80: 1–16.
Barbier E.B., Chaudhry A.M. (2014): Urban growth and water.Water Resources and Economics, 6: 1–17.
Black D., Henderson V. (1999): A theory of urban growth. Journal of Political Economy, 107: 252–84.
Cazcarro I., Duarte R., Sánchez-Chóliz J. (2013): Economic growth and the evolution of water consumption in Spain: A structural decomposition analysis. Ecological Economics, 96: 51–61.
Gao S., He Y. (2017): The effect of urbanization and economic performance on metropolitan water consumption : Theoretic model and evidence from Guangzhou of China. Applied Economics and Finance, 4: 163–71.
Gleick P.H. (2003): Water use. Annual Review of Environment and Resources, 28: 275–314.
Guangzhou Statistical Yearbook (2016): Guangzhou Statistical Yearbook. Guangzhou Municipal Statistics Bureau, China Statistics Press, Beijing, China: 10–201.
He Y., Fullerton T.M., Walke A.G. (2017): Electricity consumption and metropolitan economic performance in Guangzhou : 1950–2013. Energy Economics, 63: 154–160.
Imbens G.W. (2014): Instrumental variables: An econometrician’s perspective. Statistical Science, 29: 323–58.
Imbens G.W., Angrist J.D. (1994): Identification and estimation of local average treatment effects. Econometrica, 62: 467–75.
Katz D. (2015): Water use and economic growth: Reconsidering the environmental Kuznets curve relationship. Journal of Cleaner Production, 88: 205–213.
Ngoran S.D., Xiong Z.X., Wesseh P.K. (2016): Signatures of water resources consumption on sustainable economic growth in Sub-Saharan African countries. International Journal of Sustainable Built Environment, 5: 114–122.
Sheng P., Dong Y., Vochozka M. (2020): Analysis of cost-effective methods to reduce industrial wastewater emissions in China. Water, 12: 1–13.
Stern D.I., Burkes P.J., Bruns S.B., Burke P.J. (2018): The impact of electricity on economic development: A macroeconomic perspective. International Review of Environmental and Resource Economics, 12: 85–127.
download PDF

© 2020 Czech Academy of Agricultural Sciences | Prohlášení o přístupnosti