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CO 2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?

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  • Thomas Bassetti
  • Nikos Benos
  • Stelios Karagiannis

Abstract

This paper analyzes the co-evolution of two major determinants of social welfare, namely, income and carbon emissions. In particular, by using a distribution dynamics approach based on Markov chains, we investigate the shape and behavior of the joint distribution of per-capita income and carbon dioxide emissions. We arrive at several interesting conclusions, especially in the context of international negotiations on climate change. First, evidence does not support theoretical models predicting the existence of a poverty-environment trap. Specifically, in the long-run two main groups of countries will emerge: poor versus polluting countries. Second, the typical development path leads initially to high emission levels and, subsequently, to high income. Third, the convergence process towards the stationary distribution is very slow. Finally, for carbon emissions, whenever it is observed, the environmental Kuznets curve seems to be only a transitory phenomenon. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Thomas Bassetti & Nikos Benos & Stelios Karagiannis, 2013. "CO 2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 101-125, January.
  • Handle: RePEc:kap:enreec:v:54:y:2013:i:1:p:101-125
    DOI: 10.1007/s10640-012-9583-1
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    4. Antal, Miklós, 2014. "Green goals and full employment: Are they compatible?," Ecological Economics, Elsevier, vol. 107(C), pages 276-286.
    5. El Ouardighi, Fouad & Kogan, Konstantin & Boucekkine, Raouf, 2017. "Optimal Recycling Under Heterogeneous Waste Sources and the Environmental Kuznets Curve," ESSEC Working Papers WP1711, ESSEC Research Center, ESSEC Business School.
    6. Jian-Xin Wu & Ling-Yun He & ZhongXiang Zhang, 2019. "Does China Fall into Poverty-Environment Traps? Evidence from Long-term Income Dynamics and Urban Air Pollution," Working Papers 2019.05, Fondazione Eni Enrico Mattei.
    7. Mahmut Zortuk & Sinan Çeken, 2016. "Testing Environmental Kuznets Curve in the Selected Transition Economies with Panel Smooth Transition Regression Analysis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 18(43), pages 537-537, August.
    8. Alexander Golub & Michael Toman, 2016. "Climate Change, Industrial Transformation, and “Environmental Growth Traps”," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 249-263, February.
    9. Dávila-Fernández, Marwil J. & Sordi, Serena, 2020. "Attitudes towards climate policies in a macrodynamic model of the economy," Ecological Economics, Elsevier, vol. 169(C).
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    11. Battisti, Michele & Delgado, Michael S. & Parmeter, Christopher F., 2015. "Evolution of the global distribution of carbon dioxide: A finite mixture analysis," Resource and Energy Economics, Elsevier, vol. 42(C), pages 31-52.
    12. LAWSON, Laté A. & MARTINO, Roberto & NGUYEN-VAN, Phu, 2020. "Environmental convergence and environmental Kuznets curve: A unified empirical framework," Ecological Modelling, Elsevier, vol. 437(C).
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    15. Golub, Alexander & Toman, Michael, 2014. "Climate change, industrial transformation, and"development traps"," Policy Research Working Paper Series 6951, The World Bank.
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    More about this item

    Keywords

    CO 2 emissions; Convergence; Markov chains; Multiple equilibria; C14; O11; O44; Q53;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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