Agric. Econ. - Czech, 2020, 66(9):413-423 | DOI: 10.17221/270/2020-AGRICECON

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

Yiming He ORCID...*,1, Thomas M. Fullerton Jr2
1 School of National Agricultural Institution and Development, South China Agricultural University, Guangzhou, Guangdong, China
2 Department of Economics and Finance, University of Texas at El Paso, El Paso, USA

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.

Keywords: agricultural population urbanization; China; generalized method of moments; endogenous economic

Published: September 30, 2020  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
He Y, Fullerton TM. The economic analysis of instrument variables estimation in dynamic optimal models with an application to the water consumption. Agric. Econ. - Czech. 2020;66(9):413-423. doi: 10.17221/270/2020-AGRICECON.
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Angrist J.D., Pischke J.S. (2008): Mostly Harmless Econometrics : An Empiricist's Companion. New Jersey, United States, Princeton University Press: 113-218. Go to original source...
    2. 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. Go to original source...
    3. 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. Go to original source...
    4. Angrist J.D., Krueger A.B. (1991): Does compulsory school attendance affect schooling and earnings? The Quarterly Journal of Economics, 106: 979-1014. Go to original source...
    5. 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. Go to original source...
    6. Barbier E.B. (2004): Water and economic growth. Economic Record, 80: 1-16. Go to original source...
    7. Barbier E.B., Chaudhry A.M. (2014): Urban growth and water. Water Resources and Economics, 6: 1-17. Go to original source...
    8. Black D., Henderson V. (1999): A theory of urban growth. Journal of Political Economy, 107: 252-84. Go to original source...
    9. 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. Go to original source...
    10. 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. Go to original source...
    11. Gleick P.H. (2003): Water use. Annual Review of Environment and Resources, 28: 275-314. Go to original source...
    12. Guangzhou Statistical Yearbook (2016): Guangzhou Statistical Yearbook. Guangzhou Municipal Statistics Bureau, China Statistics Press, Beijing, China: 10-201.
    13. He Y., Fullerton T.M., Walke A.G. (2017): Electricity consumption and metropolitan economic performance in Guangzhou : 1950-2013. Energy Economics, 63: 154-160. Go to original source...
    14. Imbens G.W. (2014): Instrumental variables: An econometrician's perspective. Statistical Science, 29: 323-58. Go to original source...
    15. Imbens G.W., Angrist J.D. (1994): Identification and estimation of local average treatment effects. Econometrica, 62: 467-75. Go to original source...
    16. Katz D. (2015): Water use and economic growth: Reconsidering the environmental Kuznets curve relationship. Journal of Cleaner Production, 88: 205-213. Go to original source...
    17. 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. Go to original source...
    18. Sheng P., Dong Y., Vochozka M. (2020): Analysis of costeffective methods to reduce industrial wastewater emissions in China. Water, 12: 1-13. Go to original source...
    19. 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. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content