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Threshold cointegration and nonlinear adjustment between CO2 and income: the environmental Kuznets curve in Spain, 1857-2007

Author

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  • Vicente Esteve

    (Universidad de Valencia and Universidad de La Laguna, Spain)

  • Cecilio Tamarit

    (Universidad de Valencia, Spain)

Abstract

In this paper we model the long-run relationship between per capita CO2 and per capita income for the Spanish economy over the period 1857-2007. According to the Environmental Kuznets Curve (ECK) the relationship between the two variables has an inverted-U shape. However, previous studies for the Spanish economy only considered the existence of linear relationships. Such an approach may lack flexibility to detect the true shape of the relationship. Our empirical methodology accounts for a possible non-linear relationship through the use of threshold cointegration techniques. Our results confirm the non-linearity of the link between the two above-mentioned variables pointing to the existence of an Environmental Kuznets Curve for the Spanish case.

Suggested Citation

  • Vicente Esteve & Cecilio Tamarit, 2011. "Threshold cointegration and nonlinear adjustment between CO2 and income: the environmental Kuznets curve in Spain, 1857-2007," Working Papers 1106, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:1106
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    Keywords

    Environmental Kuznets curve; CO2 emissions; nonlinear relationship; threshold cointegration;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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