A panel estimation of the relationship between income, electric power consumption and CO2 emissions

BELLA, GIOVANNI;MASSIDDA, CARLA;ETZO, IVAN

2013-01-01

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Abstract

This paper aims to give a contribution on the still questioned bell-shaped relationship between carbon dioxide polluting emissions and economic growth, which is commonly known in the literature as the Environmental Kuznets Curve hypothesis. In particular, it develops a panel analysis for a group of 82 countries, including 26 OECD and 56 NON-OECD units, over the period 1980-2009. We specify the estimated model by taking into account the role of electric power consumption and compare the performance of alternative panel estimators for a quadratic and cubic specification of the empirical model. Our findings seem to go in favor of the EKC relationship for the entire sample. This outcome is fully confirmed for the OECD group of countries, whereas for the NON-OECD sub-sample a monotonically increasing relationship between CO2 and GDP seems to hold.