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The Environmental Kuznets Curve Reconsidered from the Perspective of Heterogeneity: Insights for Climate Change and Energy Policy

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  • Thomas Jobert
  • Fatih Karanfil
  • Anna Tykhonenko

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 paper, the environmental Kuznets curve (EKC) hypothesis is tested for carbon dioxide ( 2 CO ) emissions and the iterative Bayesian shrinkage procedure is employed to handle the crosscountry differences. The results suggest that: first, the EKC hypothesis is rejected for 49 out of the 51 countries considered when the heterogeneity in countries' energy efficiencies and cross-country differences in the 2 CO 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-shape curve is due to the fact that in the high-income countries, increase in gross domestic product (GDP) decreases emissions, while in the low-income countries emissions and GDP are positively correlated.

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File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2012-15.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis in its series GREDEG Working Papers with number 2012-15.

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Length: 36 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:gre:wpaper:2012-15

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Keywords: Environmental Kuznets curve; Bayesian shrinkage estimator; Heterogeneity;

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References

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