AEM230_Problem_Set__4___Fall_2007 - AEM/ECON 230...

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AEM/ECON 230 Prof. David Lee International Trade and Finance Fall 2007 Problem Set #4 Due on Saturday, November 17, at 4:30PM Question 1: Environmental Kuznets’ Curve [18 points] (a) Indicate whether each of the four scenarios presented in Table 1 is compatible or not with the relationship between incomes and environmental degradation posited by the “Environmental Kuznets’ Curve”. Provide a brief explanation for each case. [12 points] Table 1: Per Capita Income and Water Pollution Level: Four Different Scenarios Scenario A: Scenario B: Scenario C: Scenario D:
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(b) Figures 1 and 2 indicate that greenhouse gas emissions increased significantly in the United States and Canada between 1990 and 2004. Given (1) that both countries have very high per capital income levels and (2) assuming that both countries experienced significant growth in average per capita incomes over the 1990-2004 period, what can you conclude about the validity of the “Environmental Kuznets’ Curve”? [6 points] Figure 1 Figure 2 Greenhouse gas emissions per person Canada, 1990 to 2004 Year Source : Environment Canada. 2006a. National Inventory Report: Greenhouse Gas Sources and Sinks in Canada, 1990–2004. Greenhouse Gas Division, Ottawa, Ontario.
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