Investigating the Carbon Leakage Effect on the Environmental Kuznets Curve Using Luminosity Data

Economics Department Working Paper Series, No. 15

38 Pages Posted: 27 Jan 2016

Date Written: January 6, 2016

Abstract

This paper studies the effect of carbon leakage on the environmental Kuznets curve (EKC) using satellite nighttime light data. I show that nighttime lighting is an important variable for estimating carbon dioxide emissions that is superior to other existing indicators and covers all countries in the world. I find evidence of an inverted-U shaped relationship between light and, thus, greenhouse gas emissions and income, with a turning point at approximately US $50,000. However, the relationship is primarily driven by changes in the structure of international trade, implying strong carbon leakage effects. Consequently, environmental regulations that become operative in only one part of the world may fail without global coordination.

Keywords: Carbon Leakage Nighttime Lighting, Environmental Kuznets Curve

JEL Classification: F18, F64, Q50

Suggested Citation

Steinkraus, Arne, Investigating the Carbon Leakage Effect on the Environmental Kuznets Curve Using Luminosity Data (January 6, 2016). Economics Department Working Paper Series, No. 15, Available at SSRN: https://ssrn.com/abstract=2723070 or http://dx.doi.org/10.2139/ssrn.2723070

Arne Steinkraus (Contact Author)

Institute of Economics ( email )

Abt-Jerusalem-Str. 7
Braunschweig, D-38106
Germany

HOME PAGE: http://https://www.tu-braunschweig.de/vwl

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