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On the Robustness of Robustness Checks of the Environmental Kuznets Curve

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  • Marzio Galeotti

    (Fondazione Eni Enrico Mattei)

  • Matteo Manera

    (University of Milan-Bicocca and Fondazione Eni Enrico Mattei)

  • Alessandro Lanza

    (Eni S.p.A. and Fondazione Eni Enrico Mattei)

Abstract

Since its first inception in the debate on the relationship between environment and growth in 1992, the Environmental Kuznets Curve has been subject to continuous and intense scrutiny. The literature can be roughly divided in two historical phases. Initially, after the seminal contributions, additional work aimed to extend the investigation to new pollutants and to verify the existence of an inverted-U shape as well as assessing the value of the turning point. The following phase focused instead on the robustness of the empirical relationship, particularly with respect to the omission of relevant explanatory variables other than GDP, alternative datasets, functional forms, and grouping of the countries examined. The most recent line of investigation criticizes the Environmental Kuznets Curve on more fundamental grounds, in that it stresses the lack of sufficient statistical testing of the empirical relationship and questions the very existence of the notion of Environmental Kuznets Curve. Attention is drawn in particular on the stationarity properties of the series involved – per capita emissions or concentrations and per capita GDP – and, in case of unit roots, on the cointegration property that must be present for the Environmental Kuznets Curve to be a well-defined concept. Only at that point can the researcher ask whether the long-run relationship exhibits an inverted-U pattern. On the basis of panel integration and cointegration tests for sulphur, Stern (2002, 2003) and Perman and Stern (1999, 2003) have presented evidence and forcefully stated that the Environmental Kuznets Curve does not exist. In this paper we ask whether similar strong conclusions can be arrived at when carrying out tests of fractional panel integration and cointegration. As an example we use the controversial case of carbon dioxide emissions. The results show that more EKCs come back into life relative to traditional integration/cointegration tests. However, we confirm that the EKC remains a fragile concept.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.22.

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Date of creation: Feb 2006
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Handle: RePEc:fem:femwpa:2006.22

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Keywords: Environment; Growth; CO2 Emissions; Panel data; Fractional integration; Panel cointegration tests;

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Citations

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Cited by:
  1. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2011. "Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks," Working Papers 2011.62, Fondazione Eni Enrico Mattei.
  2. Valeria Costantini & Chiara Martini, 2010. "A Modified Environmental Kuznets Curve for sustainable development assessment using panel data," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 10(1/2), pages 84-122.
  3. Massimiliano Mazzanti & Antonio Musolesi, 2013. "The heterogeneity of carbon Kuznets curves for advanced countries: comparing homogeneous, heterogeneous and shrinkage/Bayesian estimators," Applied Economics, Taylor & Francis Journals, vol. 45(27), pages 3827-3842, September.
  4. Massimiliano Mazzanti & Antonio Musolesi, 2012. "Breaking Environmental Kuznets Curves. Evaluating Energy and Policy Time Events Effects on CO2 Trends for Advanced Countries," Working Papers 201214, University of Ferrara, Department of Economics.
  5. Bagliani, Marco & Bravo, Giangiacomo & Dalmazzone, Silvana, 2008. "A consumption-based approach to environmental Kuznets curves using the ecological footprint indicator," Ecological Economics, Elsevier, vol. 65(3), pages 650-661, April.
  6. Donatella Baiardi, 2012. "Innovation and the environmental Kuznets curve: the case of CO, NMVOCs and SOx in the Italian regions," Quaderni di Dipartimento 156, University of Pavia, Department of Economics and Quantitative Methods.
  7. Massimiliano Mazzanti & Antonio Musolesi, 2011. "Income and time related effects in EKC," Working Papers 201105, University of Ferrara, Department of Economics.
  8. Aslanidis Nektarios, 2009. "Environmental Kuznets curves for carbon emissions: A critical survey," wp.comunite 0051, Department of Communication, University of Teramo.
  9. Annicchiarico, Barbara & Bennato, Anna Rita & Costa, Andrea, 2009. "Economic Growth and Carbon Dioxide Emissions in Italy, 1861-2003," MPRA Paper 12817, University Library of Munich, Germany.
  10. Nektarios Aslanidis, 2009. "Environmental Kuznets Curves for Carbon Emissions: A Critical Survey," Working Papers 2009.75, Fondazione Eni Enrico Mattei.

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