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A Dynamic Nonlinear Panel Decomposition Model for the Global Environmental Kuznets Curve

Author

Listed:
  • Cheyenne Amoroso

    (Universidade da A Coruna)

  • Carolina Garcia-Martos

    (Universidad Politecnica de Madrid)

  • Siem Jan Koopman

    (Vrije Universiteit Amsterdam)

Abstract

We propose a decomposition of the Environmental Kuznets Curve (EKC) based on a differenceof-sigmoid functions with one for the economic-growth effect and one for the green-economy effect. This nonlinear function replaces the traditional quadratic specification in panel data models. We further extend the framework with unobserved stochastic trends to capture time-varying features such as evolving energy mixes and technological advances. The panel model can be represented in state-space form. We show that parameter estimation can be carried out by nonlinear regression and Kalman filter methods. In our empirical study, we consider a panel of pollution (CO2 emissions) and economic output variables for 15 major economies (G7, Australia and 7 emerging countries), representing approximately 75% of the global economy. We extract the common EKC where its parameters are pooled or partially pooled across all countries. The empirical results show statistically significant evidence of a global relevant EKC.

Suggested Citation

  • Cheyenne Amoroso & Carolina Garcia-Martos & Siem Jan Koopman, 2026. "A Dynamic Nonlinear Panel Decomposition Model for the Global Environmental Kuznets Curve," Tinbergen Institute Discussion Papers 26-057/III, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20260057
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment

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