Nonlinearity between CO 2 Emission and Economic Development: Evidence from a Functional Coefficient Panel Approach

Kyungsik Nam, Sungro Lee and Hocheol Jeon
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Sungro Lee: Research Institute of Economics and Management, Korea Gas Corporation, Daegu 41062, Korea
Hocheol Jeon: Climate, Air Quality and Safety Research Group, Korea Environmental Institute, Sejong 30147, Korea

Sustainability, 2020, vol. 12, issue 24, 1-10

Abstract: This paper investigates the nonlinear relationship between CO 2 emission and economic development using a newly developed functional coefficient panel model. In contrast to the existing literature, which suggests that the income elasticity of CO 2 emission is parametrically modeled as a function of income, the income coefficient of CO 2 emission is set as a function of both income and time. Then, we estimate the income elasticity in a nonparametric way using the country panel data covering 1971–2017. By doing so, we impose richer dynamics to the income elasticity not only over income but also over time. Our empirical results indicate that the income elasticity has decreased over time for high-income countries, whereas it has increased over time for low-income countries.

Keywords: carbon dioxide emission; cointegration; economic growth; functional coefficient panel (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:24:p:10258-:d:458880

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