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Modelling the nonlinear relationship between CO2 emissions from oil and economic growth

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  • Wang, Kuan-Min

Abstract

The purpose of this paper is to examine the relationship between carbon dioxide (CO2) emissions from oil and GDP, using panel data from 1971 to 2007 of 98 countries. Previous studies have discussed the environmental Kuznets curve (EKC) hypothesis, but little attention has been paid to the existence of a nonlinear relationship between these two variables. We argue that there exists a threshold effect between the two variables: different levels of economic growth bear different impacts on oil CO2 emissions. Our empirical results do not support the EKC hypothesis. Additionally, the results of short-term analyses of static and dynamic panel threshold estimations suggest the efficacy of a double-threshold (three-regime) model. In the low economic growth regime, economic growth negatively affects oil CO2 emissions growth; in the medium economic growth regime, however, economic growth positively impacts oil CO2 emissions growth; and in the high economic growth regime, the impact of economic growth is insignificant.

Suggested Citation

  • Wang, Kuan-Min, 2012. "Modelling the nonlinear relationship between CO2 emissions from oil and economic growth," Economic Modelling, Elsevier, vol. 29(5), pages 1537-1547.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:5:p:1537-1547
    DOI: 10.1016/j.econmod.2012.05.001
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    More about this item

    Keywords

    Carbon dioxide emissions from oil; Economic growth; Environmental Kuznets curve; Dynamic panel threshold model;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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