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Environmental Kuznets curve and green regulation

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  • Luca Bettarelli
  • Davide Furceri
  • Prakash Loungani
  • Jonathan D. Ostry
  • Loredana Pisano

Abstract

In this paper, we first test the validity of the Environmental Kuznets Curve (EKC) hypothesis, using a large sample of approximately 190 advanced and developing countries, over a period of 34 years (1989-2022). We find that (CO 2 ) emissions respond positively to increasing income per capita, up to a turning point of approximately US$25,000. In a departure from the previous literature, we allow the relationship between economic development and emissions to depend on the stringency of environmental regulation.

Suggested Citation

  • Luca Bettarelli & Davide Furceri & Prakash Loungani & Jonathan D. Ostry & Loredana Pisano, 2025. "Environmental Kuznets curve and green regulation," WIDER Working Paper Series wp-2025-18, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2025-18
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    References listed on IDEAS

    as
    1. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    2. Deb, Pragyan & Furceri, Davide & Ostry, Jonathan D. & Tawk, Nour, 2023. "Creative destruction during crises: An opportunity for a cleaner energy mix," Energy Economics, Elsevier, vol. 128(C).
    3. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    4. Panayotou, Theodore, 1997. "Demystifying the environmental Kuznets curve: turning a black box into a policy tool," Environment and Development Economics, Cambridge University Press, vol. 2(4), pages 465-484, November.
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