Estimating country-specific environmental Kuznets curves from panel data: a Bayesian shrinkage approach

Thomas Jobert (), Fatih Karanfil and Anna Tykhonenko ()

Applied Economics, 2014, vol. 46, issue 13, 1449-1464

Abstract: Designing an efficient global climate policy turns out to be a difficult yet crucial task since there are noteworthy cross-country differences in energy and carbon intensities. In this article, the environmental Kuznets curve (EKC) hypothesis is tested for carbon dioxide (CO 2 ) emissions, and as a modelling technique, the iterative Bayesian shrinkage procedure is employed to handle the cross-country differences. The results suggest that first the EKC hypothesis is rejected for 47 out of the 51 countries considered when the heterogeneity in countries' energy efficiencies and cross-country differences in the CO 2 emissions trajectories are accounted for; second, a classification of the results with respect to the development levels of the countries concerned reveals that the emergence of an overall inverted U-shaped curve is due to the fact that in high-income countries increase in gross domestic product (GDP) decreases emissions, while in low-income countries emissions and GDP are positively correlated.

Date: 2014
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Working Paper: Estimating country-specific environmental Kuznets curves from panel data: a Bayesian shrinkage approach (2014)
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DOI: 10.1080/00036846.2013.875111

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