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On the Robustness of Robustness Checks of the Environmental Kuznets Curve

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  • Marzio Galeotti
  • Matteo Manera
  • Alessandro Lanza

Abstract

Since its first inception in the debate on the relationship between environment and growth in 1992, the Environmental Kuznets Curve has been subject of continuous and intense scrutiny. The literature can be roughly divided in two historical phases. Initially, after the seminal contributions, additional work aimed to extend the investigation to new pollutants and to verify the existence of an inverted-U shape as well as assessing the value of the turning point. The following phase focused instead on the robustness of the empirical relationship, particularly with respect to the omission of relevant explanatory variables other than GDP, alternative datasets, functional forms, and grouping of the countries examined. The most recent line of investigation criticizes the Environmental Kuznets Curve on more fundamental grounds, in that it stresses the lack of sufficient statistical testing of the empirical relationship and questions the very existence of the notion of Environmental Kuznets Curve. Attention is in particular drawn on the stationarity properties of the series involved – per capita emissions or concentrations and per capita GDP – and, in case of presence of unit roots, on the cointegration property that must be present for the Environmental Kuznets Curve to be a well-defined concept. Only at that point can the researcher ask whether the long-run relationship exhibits an inverted-U pattern. On the basis of panel integration and cointegration tests for sulphur, Stern (2002, 2003) and Perman and Stern (1999, 2003) have presented evidence and forcefully stated that the Environmental Kuznets Curve does not exist. In this paper we ask whether similar strong conclusions can be arrived at when carrying out tests of fractional panel integration and cointegration. As an example we use the controversial case of carbon dioxide emissions. The results show that more EKCs come back into life relative to traditional integration/cointegration tests. However, we confirm that the EKC remains a fragile concept.

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  • Marzio Galeotti & Matteo Manera & Alessandro Lanza, 2006. "On the Robustness of Robustness Checks of the Environmental Kuznets Curve," Working Papers 20060501, Università degli Studi di Milano-Bicocca, Dipartimento di Statistica, revised May 2006.
  • Handle: RePEc:mis:wpaper:20060501
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    2. Paolo Buonanno & Leopoldo Fergusson & Juan Fernando Vargas, 2014. "The crime kuznets curve," BORRADORES DE INVESTIGACIÓN 011043, UNIVERSIDAD DEL ROSARIO.
    3. Massimiliano Mazzanti & Antonio Musolesi, 2011. "Income and time related effects in EKC," Working Papers 201105, University of Ferrara, Department of Economics.
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    7. Aslanidis Nektarios, 2009. "Environmental Kuznets curves for carbon emissions: A critical survey," wp.comunite 0051, Department of Communication, University of Teramo.
    8. Begum, Rawshan Ara & Sohag, Kazi & Abdullah, Sharifah Mastura Syed & Jaafar, Mokhtar, 2015. "CO2 emissions, energy consumption, economic and population growth in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 594-601.
    9. Al Mamun, Md. & Sohag, Kazi & Hannan Mia, Md. Abdul & Salah Uddin, Gazi & Ozturk, Ilhan, 2014. "Regional differences in the dynamic linkage between CO2 emissions, sectoral output and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1-11.
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    11. Bagliani, Marco & Bravo, Giangiacomo & Dalmazzone, Silvana, 2008. "A consumption-based approach to environmental Kuznets curves using the ecological footprint indicator," Ecological Economics, Elsevier, vol. 65(3), pages 650-661, April.
    12. Annicchiarico, Barbara & Bennato, Anna Rita & Costa, Andrea, 2009. "Economic Growth and Carbon Dioxide Emissions in Italy, 1861-2003," MPRA Paper 12817, University Library of Munich, Germany.
    13. Massimiliano Mazzanti & Antonio Musolesi, 2012. "Breaking Environmental Kuznets Curves. Evaluating Energy and Policy Time Events Effects on CO2 Trends for Advanced Countries," Working Papers 201214, University of Ferrara, Department of Economics.
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    More about this item

    Keywords

    Environment; Growth; CO2 Emissions; Panel Data; Fractional Integration; Panel Cointegration Tests;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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