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Threshold effect in the relationship between environmental taxes and CO2 emissions: A PSTR specification

Author

Listed:
  • Taha Zaghdoudi

    (Faculty of Law, Economics and Management of Jendouba, Tunisia)

  • Samir Maktouf

    (Faculty of Economic Sciences and Management of Tunis , Tunisia)

Abstract

This paper examines the relationship between environmental taxes and CO2 emissions for the OECD countries over the period 1994-2014, within the framework of the environmental Kuznets curve (EKC). By performing Panel Smooth Threshold Regression (PSTR) model, we found that the nexus between environmental taxes and CO2 emissions is non-linear. Besides, results show that there exists a statistically positive relationship between environmental taxes and CO2 emissions above the threshold level of 2.67\%, above which environmental taxes starts increasing CO2 emissions in OECD countries. Findings indicate also that there is a quadratic relationship between CO2 emissions and economic growth, confirming the existence of an Environmental Kuznets Curve (EKC) for OECD countries. This paper supports the view that a properly-implemented environmental taxes would result in the reduction of CO2 emissions in OECD countries.

Suggested Citation

  • Taha Zaghdoudi & Samir Maktouf, 2017. "Threshold effect in the relationship between environmental taxes and CO2 emissions: A PSTR specification," Economics Bulletin, AccessEcon, vol. 37(3), pages 2086-2094.
    • Handle: RePEc:ebl:ecbull:eb-17-00684
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    More about this item

    Keywords

    CO2 emissions; Environmental taxes; Renewable energy; Panel smooth transition regression;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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