Estimating country-specific environmental Kuznets curves from panel data: a Bayesian shrinkage approach

Thomas Jobert (1) , Fatih Karanfil (2) , Anna Tykhonenko (1)

1 GREDEG - Groupe de Recherche en Droit, Economie et Gestion
2 EconomiX - EconomiX

Designing an efficient global climate policy turns out to be a difficult yet crucial task since there are noteworthy cross-country differences in energy and carbon intensities. In this article, the environmental Kuznets curve (EKC) hypothesis is tested for carbon dioxide (CO2) emissions, and as a modelling technique, the iterative Bayesian shrinkage procedure is employed to handle the cross-country differences. The results suggest that first the EKC hypothesis is rejected for 47 out of the 51 countries considered when the heterogeneity in countries' energy efficiencies and cross-country differences in the CO2 emissions trajectories are accounted for; second, a classification of the results with respect to the development levels of the countries concerned reveals that the emergence of an overall inverted U-shaped curve is due to the fact that in high-income countries increase in gross domestic product (GDP) decreases emissions, while in low-income countries emissions and GDP are positively correlated.

Mots clés: heterogeneity; environmental Kuznets curve; Bayesian shrinkage estimator

Domaines: Economies et finances

Thomas Jobert, Fatih Karanfil, Anna Tykhonenko. Estimating country-specific environmental Kuznets curves from panel data: a Bayesian shrinkage approach. Applied Economics, 2014, 46 (13), pp.1449-1464. ⟨10.1080/00036846.2013.875111⟩. ⟨halshs-01053358⟩