On the Robustness of Robustness Checks of the Environmental Kuznets Curve Hypothesis

26 Pages Posted: 27 May 2008

See all articles by Marzio Galeotti

Marzio Galeotti

University of Milan - Department of Environmental Science and Policy (DESP); Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy

Matteo Manera

University of Milan-Bicocca, Italy - Department of Economics, Management and Statistics (DEMS); Fondazione Eni Enrico Mattei (FEEM), Milan, Italy

Alessandro Lanza

Fondazione Eni Enrico Mattei (FEEM), Milan; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici; Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy

Date Written: May 2008

Abstract

Since its first inception in the debate on the relationship between environment and growth in 1992, the Environmental Kuznets Curve hypothesis (EKC hereafter) has been subject of continuous and intense scrutiny. The most recent line of investigation criticizes the EKC hypothesis on more fundamental grounds, in that it stresses the lack of sufficient statistical testing of the empirical relationship and questions the very existence of the notion of EKC. Attention is in particular drawn on the stationarity properties of the series involved - per capita emissions or concentrations and per capita GDP - and, in case of presence of unit roots, on the cointegration property that must be present for the EKC to be a well-defined concept. Only at that point can the researcher ask whether the long-run relationship exhibits an inverted-U pattern. On the basis of panel integration and cointegration tests for sulfur, Stern (2002, 2003) and Perman and Stern (1999, 2003) have presented evidence and forcefully stated that the EKC hypothesis does not exist. In this paper we ask whether similar strong conclusions can be arrived at when carrying out tests of system fractional integration and cointegration. As an example we use the controversial case of carbon dioxide emissions. The results show that more EKCs come back into life relative to traditional integration/cointegration tests. However, we confirm that the EKC hypothesis remains a fragile concept.

Keywords: Environment, Growth, CO2 Emissions, Panel Data, Fractional Integration, System Cointegration Tests

JEL Classification: O13, Q30, Q32, C12, C23

Suggested Citation

Galeotti, Marzio and Manera, Matteo and Lanza, Alessandro, On the Robustness of Robustness Checks of the Environmental Kuznets Curve Hypothesis (May 2008). Available at SSRN: https://ssrn.com/abstract=1137584 or http://dx.doi.org/10.2139/ssrn.1137584

Marzio Galeotti (Contact Author)

University of Milan - Department of Environmental Science and Policy (DESP) ( email )

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+39-2-50316486 (Fax)

HOME PAGE: http://www.unimi.it/chiedove/cv/ENG/marzio_galeotti.pdf?1531977155891

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

via Rontgen
Milan, 20123
Italy
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HOME PAGE: http://www.iefe.unibocconi.it

Matteo Manera

University of Milan-Bicocca, Italy - Department of Economics, Management and Statistics (DEMS) ( email )

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Milan, 20126
Italy
+39 02 6448 5819 (Phone)
+39 02 6448 5878 (Fax)

HOME PAGE: http://www.matteomanera.it

Fondazione Eni Enrico Mattei (FEEM), Milan, Italy ( email )

Corso Magenta, 63
Milan, 20123
Italy
+39 02 520 36944 (Phone)

HOME PAGE: http://www.feem.it

Alessandro Lanza

Fondazione Eni Enrico Mattei (FEEM), Milan

Corso Magenta 63
20123 Milan
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Bologna, I-73100
Italy

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

viale Filippetti, 9
Milan, 20122
Italy

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