The Use of Air Pollution to Explain Cross-Country Income Differences

Using the Development Accounting methodology specified in Caselli (2004), we investigate the potential of PM2.5, a measure of pollution, as an explanation of cross-country differences in GDP using available Macroeconomic data from the Penn World Table and the WHO. We find that the addition of PM2.5 makes improvements to the model within the expectations of the literature. This adjustment shows promise for use in cooperation with other, more potent economic factors.