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Revisiting the carbon emissions hypothesis in the developing and developed countries: a new panel cointegration approach

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Abstract

Since global warming worsens with economic development and emitted CO2 is one of the main greenhouse gases, it is important to understand the relationship between CO2 emissions and economic growth. The paper applies a new panel cointegration test with cross-sectional dependence and structural breaks to examine this relationship in developed and developing countries, respectively. The results indicate that the “Environmental Kuznets Curve” does not hold in either group. For developing countries, there is neither linear nor quadratic long-term equilibrium relationship between CO2 emissions and economic growth. For developed countries, the quadratic relationship does exist between CO2 emissions and economic growth, whereas the linear one does not. A half of these countries have inverted U-shaped curves, while the other half have U-shaped curves. Besides, most of these countries are still on the rising stage of the curve. This paper gives new insights for policymakers to keep a balance between sustainable economic growth and suitable environmental quality.

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Notes

  1. Wang and Xue (2015). Cointegration with structural breaks in cross-sectional dependent panel. Working Paper. The paper shows the results of ignoring structural breaks by Monte Carlo. These can be obtained upon request from the corresponding author.

  2. \(\mathop = \limits^{d}\) denotes definitional equality, \(\left\lfloor x \right\rfloor\) denotes the integer part of \(x\).

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Acknowledgements

This work was supported by National Nature Science Foundation of China (Grant number 71773012); National Nature Science Foundation of China (Grant number 71903207); and Scientific research funding projects by the Department of Education of Liaoning Province (20190154).

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Authors and Affiliations

  1. Dalian Commodity Exchange, No. 129 Huizhan Road, Dalian, 116023, China

    Chonghua Du

  2. School of Economics, Dongbei University of Finance and Economics, Dalian, 116023, China

    Jing Xue & Weiguo Wang

  3. School of Finance and Taxation, Central University of Finance and Economics, Beijing, 102206, China

    Jian Tong

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  1. Chonghua Du
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  2. Jing Xue
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  3. Weiguo Wang
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  4. Jian Tong
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Correspondence to Jing Xue.

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Handling Editor: Luiz Duczmal.

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Du, C., Xue, J., Wang, W. et al. Revisiting the carbon emissions hypothesis in the developing and developed countries: a new panel cointegration approach. Environ Ecol Stat 29, 295–314 (2022). https://doi.org/10.1007/s10651-021-00526-z

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