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The Environmental Kuznets Curve: Tipping Points, Uncertainty and Weak Identification

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  • Bernard, Jean-Thomas
  • Gavin, Michael
  • Khalaf, Lynda
  • Voia, Marcel

Abstract

We consider an empirical estimation of the Environmental Kuznets Curve (EKC) for carbon dioxide and sulphur, with a focus on confidence set estimation of the tipping point. Various econometric – parametric and nonparametric – methods are considered, reflecting the implications of persistence, endogeneity, the necessity of breaking down our panel regionally, and the small number of countries within each panel. In particular, we propose an inference method that corrects for potential weak-identification of the tipping point. Weak identification may occur if the true EKC is linear while a quadratic income term is nevertheless imposed into the estimated equation. Relevant literature to date confirms that non-linearity of the EKC is indeed not granted, which provides the motivation for our work. Viewed collectively, our results confirm an inverted U-shaped EKC in the OECD countries but generally not elsewhere, although a local-pollutant analysis suggest favorable exceptions beyond the OECD. Our measures of uncertainty confirm that it is difficult to identify economically plausible tipping points. Policy-relevant estimates of the tipping point can nevertheless be recovered from a local-pollutant long-run or non-parametric perspective.

Suggested Citation

  • Bernard, Jean-Thomas & Gavin, Michael & Khalaf, Lynda & Voia, Marcel, 2011. "The Environmental Kuznets Curve: Tipping Points, Uncertainty and Weak Identification," Working Papers 119109, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
  • Handle: RePEc:ags:ulavwp:119109
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    Cited by:

    1. Roberto Martino & Phu Nguyen-Van, 2016. "Environmental Kuznets curve and environmental convergence: A unified empirical framework for CO2 emissions," Working Papers of BETA 2016-18, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. repec:ove:journl:aid:11878 is not listed on IDEAS
    3. Sugiawan, Yogi & Managi, Shunsuke, 2016. "The environmental Kuznets curve in Indonesia: Exploring the potential of renewable energy," Energy Policy, Elsevier, vol. 98(C), pages 187-198.
    4. Ferris, J. Stephen & Voia, Marcel C., 2015. "The effect of federal government size on private economic performance in Canada: 1870–2011," Economic Modelling, Elsevier, vol. 49(C), pages 172-185.
    5. repec:eee:rensus:v:74:y:2017:i:c:p:1119-1130 is not listed on IDEAS
    6. Martinangeli, Andrea & Zoli, Mariangela, 2013. "Exploring Environmentally Significant Behaviors in a Multidimensional Perspective," Working Papers in Economics 561, University of Gothenburg, Department of Economics.
    7. K. Herve DAKPO & Pascale COMBES MOTEL & Johanna CHOUMERT, 2012. "The environmental Kuznets curve for deforestation: a threatened theory? A meta-analysis," Working Papers 201216, CERDI.
    8. Jean-Thomas Bernard & Ba Chu & Lynda Khalaf & Marcel Voia, 2019. "Non-Standard Confidence Sets for Ratios and Tipping Points with Applications to Dynamic Panel Data," Annals of Economics and Statistics, GENES, issue 134, pages 79-108.
    9. repec:wly:sustdv:v:26:y:2018:i:6:p:726-740 is not listed on IDEAS
    10. Fouad El Ouardighi & Konstantin Kogan & Raouf Boucekkine, 2017. "Optimal recycling under heterogeneous waste sources and the environmental Kuznets curve," Working Papers hal-01693488, HAL.
    11. Panagiotis Fotis & Michael Polemis, 2018. "Sustainable development, environmental policy and renewable energy use: A dynamic panel data approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 26(6), pages 726-740, November.
    12. Maralgua Och, 2017. "Empirical Investigation of the Environmental Kuznets Curve Hypothesis for Nitrous Oxide Emissions for Mongolia," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 117-128.
    13. Choumert, Johanna & Combes Motel, Pascale & Dakpo, Hervé K., 2013. "Is the Environmental Kuznets Curve for deforestation a threatened theory? A meta-analysis of the literature," Ecological Economics, Elsevier, vol. 90(C), pages 19-28.
    14. repec:eee:ecmode:v:77:y:2019:i:c:p:70-80 is not listed on IDEAS
    15. Philippe Polomé & Jérôme Trotignon, 2016. "Amazonian Deforestation, Environmental Kuznets Curve and Deforestation Policy: A Cointegration Approach," Working Papers 1608, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    16. Elmarzougui, Eskandar & Larue, Bruno & Tamini, Lota, D., 2013. "The Environment, Trade Openness, and Domestic and Foreign Investments," MPRA Paper 61332, University Library of Munich, Germany, revised 2014.

    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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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