Advanced Search
MyIDEAS: Login to save this article or follow this journal

Functional sensitivity of testing the environmental Kuznets curve hypothesis

Contents:

Author Info

  • Wang, Yi-Chia
Registered author(s):

    Abstract

    Conventional tests for the environmental Kuznets curve (EKC) hypothesis mostly apply a quadratic equation in modeling the non-linear relationship between environmental indices (such as air pollutants) and welfare measures (such as income per capita). If their inverted-U shaped pattern is empirically accepted with two significant regressors, the income per capita and its square transformation, the EKC hypothesis is supported. Using an OECD sample, this paper shows that the validity of testing the EKC hypothesis is sensitive to how we transform income non-linearly in sulfur and carbon EKC regressions. This paper carries out experiments on different powers of γ for transforming income non-linearly and concludes that only when 0<γ<1 and 1<γ<2 will the EKC regression demonstrate a testable non-linear cointegration relationship between the two air pollutants and income per capita. In the generalized EKC regressions estimated in this paper, although we find sulfur and carbon EKC patterns in the OECD sample, none of the EKC regressions using different γ is a cointegrating equation. This finding implies an inside critique to the EKC literature that failure of cointegration of the conventional EKC regression is not because of using the quadratic functional form, but because of the fundamentally spurious relationship between the trends of pollutants and income levels.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0928765513000067
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Resource and Energy Economics.

    Volume (Year): 35 (2013)
    Issue (Month): 4 ()
    Pages: 451-466

    as in new window
    Handle: RePEc:eee:resene:v:35:y:2013:i:4:p:451-466

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/inca/505569

    Related research

    Keywords: Environmental Kuznets curve; EKC; Non-linear regression;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Department of Economics Working Papers 2000-02, Department of Economics, Williams College.
    2. Grossman, Gene & Krueger, Alan B, 1992. "Environmental Impacts of a North American Free Trade Agreement," CEPR Discussion Papers 644, C.E.P.R. Discussion Papers.
    3. Gene M. Grossman & Alan B. Krueger, 1994. "Economic Growth and the Environment," NBER Working Papers 4634, National Bureau of Economic Research, Inc.
    4. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
    5. Shafik, Nemat & Bandyopadhyay, Sushenjit, 1992. "Economic growth and environmental quality : time series and cross-country evidence," Policy Research Working Paper Series 904, The World Bank.
    6. Galeotti, Marzio & Lanza, Alessandro & Pauli, Francesco, 2006. "Reassessing the environmental Kuznets curve for CO2 emissions: A robustness exercise," Ecological Economics, Elsevier, vol. 57(1), pages 152-163, April.
    7. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, Econometric Society, vol. 49(4), pages 1057-72, June.
    8. Roger Perman & David I. Stern, 2003. "Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 325-347, 09.
    9. Panayotou, Theodore, 1997. "Demystifying the environmental Kuznets curve: turning a black box into a policy tool," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 465-484, November.
    10. Torras, Mariano & Boyce, James K., 1998. "Income, inequality, and pollution: a reassessment of the environmental Kuznets Curve," Ecological Economics, Elsevier, vol. 25(2), pages 147-160, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Marie-Sophie Hervieux & Pierre-Alexandre Mahieu, 2014. "A detailed systematic review of the recent literature on environmental Kuznets curve dealing with CO2," Working Papers hal-01010243, HAL.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:resene:v:35:y:2013:i:4:p:451-466. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.