Globalization and Emissions in Europe

This paper examines the impact of five globalization variables on sulfur dioxide and nitrogen oxides emissions in Europe from 1980-2000 in the framework of one empirical model. The spatial autoregressive regression model is estimated using 2SLS. The five variables of interest are trade, foreign direct investment, neighboring countries wealth, cross-border pollution and participation in international environmental treaties. I then omit each of the globalization effects one at a time and find that omitted variable bias would be significant for four of the globalization variables, the exception being neighbors' wealth.