A Methodology for Testing Comparative Economic Theories: Theory and Application to East-West Environmental Policies

Peter Murrell and Randi Ryterman , Journal of Comparative Economics 15(4) , 582-601 , December 1991.

Many variables of interest to comparative economists are difficult to measure or are unavailable for empirical research. To test for the effects of such variables, we offer a methodology based on examining the bias that is introduced when such variables are omitted from a model's estimation. Further, our methodology is able to use data that are available only for some countries, using a procedure to estimate missing observations. We apply the methodology to test whether the high level of environmental damage in East Europe can be explained by a tendency to export commodities intensive in pollution. We find no support for this hypothesis.

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