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Re-Examining the Income–CO 2 Emissions Nexus Using the New Kink Regression Model: Does the Kuznets Curve Exist in G7 Countries?

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  • Pei-Zhi Liu

    (College of Finance and Statistics, Hunan University, Changsha 410006, China)

  • Seema Narayan

    (Independent Researcher, Melbourne 3806, Australia)

  • Yi-Shuai Ren

    (School of Public Administration, Hunan University, Changsha 410082, China
    Research Institute of Digital Society and BlockChain, Hunan University, Changsha 410082, China
    Center for Resource and Environmental Management, Hunan University, Changsha 410082, China
    The Energy Centre, University of Auckland, 12 Grafton Rd, Auckland 1010, New Zealand)

  • Yong Jiang

    (School of Finance, Nanjing Audit University, Nanjing 211815, China)

  • Konstantinos Baltas

    (Essex Business School, University of Essex, Colchester CO4 3SQ, UK)

  • Basil Sharp

    (The Energy Centre, University of Auckland, 12 Grafton Rd, Auckland 1010, New Zealand)

Abstract

More countries have made carbon neutral or net zero emission commitments since 2019. Within this context, re-examining the environmental Kuznets curve (EKC) hypothesis plays an essential role in sizing up the global economic development situation and realizing the global carbon emission reduction target. A methodological challenge in testing the EKC hypothesis, which states that increasing income makes CO 2 emissions begin to decline beyond a turning point, lies in determining if this benchmark point exists. The EKC hypothesis between income and CO 2 emissions is reassessed by applying a new kink regression model for the G7 countries from 1890 to 2015. Results reveal the inverted U-shaped nexus does not exist for US, Germany, Italy, Canada and Japan. For these five countries, the EKC curve has a turning point, but the positive impact of incomes on CO 2 emissions becomes significantly smaller after the turning point. We describe this relationship as a pseudo-EKC. K.U.K. and France are the only exceptions, fitting the EKC hypothesis. Further analysis indicates that the relationship between income and SO 2 emissions presents an inverted U-shaped curve. Moreover, we observe that the turning point occurs at different points in time for the different G7 countries. Therefore, environmental policies targeting pollutant emission reduction should consider the different characteristics of different pollutants and regions.

Suggested Citation

  • Pei-Zhi Liu & Seema Narayan & Yi-Shuai Ren & Yong Jiang & Konstantinos Baltas & Basil Sharp, 2022. "Re-Examining the Income–CO 2 Emissions Nexus Using the New Kink Regression Model: Does the Kuznets Curve Exist in G7 Countries?," Sustainability, MDPI, vol. 14(7), pages 1-18, March.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:7:p:3955-:d:780803
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