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Economic growth and carbon dioxide emissions: an analysis of Latin America and the Caribbean

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posted on 2023-06-09, 05:36 authored by Acel Jardón, Onno Kuik, Richard TolRichard Tol
This paper analyzes the empirical relationship between carbon dioxide (CO²) emissions per-capita and economic growth in a panel of 20 Latin American and Caribbean countries over the period 1971-2011. This empirical relationship, known in the economic literature as the Environmental Kuznets Curve (EKC) hypothesis, suggests that the relationship between these variables, in the long run, follows an inverse U-shape, that is, from a certain level of per-capita income, an increased economic growth would be accompanied by improvements in environmental quality. Although this hypothesis has been studied since the 1990s, its empirical validity has recently been questioned on the basis of, among other things, the lack of diagnosis of the stationarity properties of the variables, and in a panel data context, the presence of cross-sectional dependence. Taking into account both criticisms, we use recent unit root tests and cointegration techniques that are robust to the presence of cross-sectional dependence. We find contradictory results depending on the assumption of cross-dependence. Under the assumption of cross-independence, the existence of an EKC with a realistic turning point is confirmed. However, this assumption is subsequently rejected, and because of the presence of cross-dependence in the panel, a long-run equilibrium relationship between the variables cannot be established, and we reject the existence of an EKC.

History

Publication status

  • Published

File Version

  • Published version

Journal

Atmósfera

ISSN

0187-6236

Publisher

Universidad Nacional Autonoma de Mexico

Issue

2

Volume

30

Page range

87-100

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2017-04-03

First Open Access (FOA) Date

2017-04-03

First Compliant Deposit (FCD) Date

2017-04-01

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