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Nonlinearity between CO 2 Emission and Economic Development: Evidence from a Functional Coefficient Panel Approach

Author

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  • Kyungsik Nam

    (Energy Industry Research Group, Korea Energy Economics Institute, Ulsan 44543, Korea)

  • Sungro Lee

    (Research Institute of Economics and Management, Korea Gas Corporation, Daegu 41062, Korea)

  • Hocheol Jeon

    (Climate, Air Quality and Safety Research Group, Korea Environmental Institute, Sejong 30147, Korea)

Abstract

This paper investigates the nonlinear relationship between CO 2 emission and economic development using a newly developed functional coefficient panel model. In contrast to the existing literature, which suggests that the income elasticity of CO 2 emission is parametrically modeled as a function of income, the income coefficient of CO 2 emission is set as a function of both income and time. Then, we estimate the income elasticity in a nonparametric way using the country panel data covering 1971–2017. By doing so, we impose richer dynamics to the income elasticity not only over income but also over time. Our empirical results indicate that the income elasticity has decreased over time for high-income countries, whereas it has increased over time for low-income countries.

Suggested Citation

  • Kyungsik Nam & Sungro Lee & Hocheol Jeon, 2020. "Nonlinearity between CO 2 Emission and Economic Development: Evidence from a Functional Coefficient Panel Approach," Sustainability, MDPI, vol. 12(24), pages 1-10, December.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:24:p:10258-:d:458880
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    Cited by:

    1. Hyunsoo Kang, 2021. "CO 2 Emissions Embodied in International Trade and Economic Growth: Empirical Evidence for OECD and Non-OECD Countries," Sustainability, MDPI, vol. 13(21), pages 1-20, November.
    2. Katarzyna Szymczyk & Dilek Şahin & Haşim Bağcı & Ceyda Yerdelen Kaygın, 2021. "The Effect of Energy Usage, Economic Growth, and Financial Development on CO 2 Emission Management: An Analysis of OECD Countries with a High Environmental Performance Index," Energies, MDPI, vol. 14(15), pages 1-21, August.

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