Why Did US Air Pollution Decline After 1970?"

Ross McKitrick, University of Guelph Department of Economics


US economic growth and air pollution were decoupled after 1970. Possible explanations include regulation, oil price shocks, technology and income growth. This paper uses VAR analysis to show that the 1970 Clean Air Act may have actually increased pollution in the short run but led to accelerated improvements in abatement technology. GDP and consumption growth had little direct effect while oil price increases caused small but significant emissions reductions. Recursive simulation shows that overall, the CAA, by accelerating improvements in abatement technology, reduced total emissions as of 1998 by 55% compared to what they would have been.

Empirical Economics