A Nonlinear Analysis of CO2-Income Relation for Advanced Countries

Massimiliano Mazzanti and Antonio Musolesi ()

No 2013072, Working Papers from University of Ferrara, Department of Economics

Abstract: We study long run carbon emissions - income relationships for advanced countries grouped in policy relevant groups - North America and Oceania, South Europe, North Europe. By relying on recent advances on Generalized Additive Models and adopting interaction models, we handle simultaneously three main econometric issues, named here as functional form bias, heterogeneity bias and omitted time related factors bias, which have been proved to be relevant but have been addressed separately in previous papers. We consider a model which includes both country-specifi c nonparametric time eff ects and country-speci c nonparametric income eff ects. We fi nd that country-speci c time related factors weight more than income in driving the northern EU Environmental Kuznets Curves, that cross country heterogeneity is high and that only two countries - Finland and Sweden - show bell shapes for both income and time relationships to CO2. Overall, the countries di ffer more on their carbon-time relation than on the carbon-income relation which is in almost all cases monotonic positive. The former may represent idiosyncratic innovation, energy and policy features of the countries under study.

Keywords: Semi parametric models; GAM; interaction models; environmental Kuznets curve (search for similar items in EconPapers)
JEL-codes: C14 C23 Q53 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2013-02-14
New Economics Papers: this item is included in nep-ene and nep-env
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