Cointegrating Polynomial Regressions With Power Law Trends: Environmental Kuznets Curve or Omitted Time Effects?

Yicong Lin and Hanno Reuvers
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Hanno Reuvers: Erasmus University Rotterdam

No 22-092/III, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: The environmental Kuznets curve predicts an inverted U-shaped relationship between air pollution and economic growth. Current analyses frequently employ models that restrict nonlinearities in the data to be explained by economic growth only. We propose a Global Trend Augmented Cointegrating Polynomial Regression (GTACPR) to allow for nonlinearities in time and economic growth. The theoretical properties of the GTACPR are established. Empirically, a single global trend accurately captures all nonlinearities for all the countries studied, leading to a linear relationship between GDP and CO2. This suggests that the environmental improvement of the last years is due to factors different from GDP.

JEL-codes: C12 C13 C32 Q56 (search for similar items in EconPapers)
Date: 2022-12-15
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-res
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Related works:
Working Paper: Cointegrating Polynomial Regressions with Power Law Trends: Environmental Kuznets Curve or Omitted Time Effects? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20220092

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