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

Jobert T., Karanfil F., Tykhonenko A.

APPLIED ECONOMICS, vol.46, no.13, pp.1449-1464, 2014 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 46 Issue: 13
  • Publication Date: 2014
  • Doi Number: 10.1080/00036846.2013.875111
  • Title of Journal : APPLIED ECONOMICS
  • Page Numbers: pp.1449-1464


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.