The effect of Rio Convention and other structural breaks on long-run economic development-CO2 relationships


This paper assesses the effect of the 1992 United Nations Rio Convention on Environment and Development and other unknown structural time breaks on the long-run carbon dioxide—economic development relationship for different groups of advanced countries. By taking into account the possible size distortion of standard unit roots tests and allowing nonlinearities in the trend function, we provide evidence suggesting that the time-series are nonlinear trend stationary. From this result, we then develop our analysis without moving to cointegration or first-differencing, and using an interrupted time-series approach, we identify three patterns in the dynamics of carbon dioxide: one is market-led, one is market- and policy-led, and one is more development-oriented.

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Fig. 1


  1. 1.

    Carson (2010) comments on the relative paucity of time series analysis within the EKC literature since its inception, while discussing causality issues and econometric models.

  2. 2.

    Linked to the Iranian war and related to a recession.

  3. 3.

    The methodologically oriented message is that polynomial functions of time and GDP are not adequate to capture CO2 evolution. The specific economic messages are that the shock negatively influences the CO2 pattern, which then reaches an equilibrium level unless another shock intervenes.

  4. 4.

    It is true that in the early 90s, the invasion of Kuwait by Iraq and the following Gulf war caused an oil peak. Nevertheless, that peak in constant prices was much lower than the one caused by the Iran–Iraq war and Iranian revolution (that exceeded 100$ per barrel in 2013 prices). It was comparable to the post first oil shock (Arab oil embargo) price of around 60$. It is worth noting that in the early 70s, before the first oil shock that opened the way to stagflation periods, the oil price was lower than 20$.

  5. 5.

    This highlights that assumed and unknown time-related events dynamically explain the overall EKC shape and are interrelated in certain circumstances (NE).

  6. 6.

    A ‘shock’ might be a sudden unexpected jump in a variable (covariate) or a credible policy that develops from a given time T onwards. The second case is historically rare but possible.


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Correspondence to Massimiliano Mazzanti.

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Mazzanti, M., Musolesi, A. The effect of Rio Convention and other structural breaks on long-run economic development-CO2 relationships . Econ Polit 34, 389–405 (2017).

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  • Carbon Kuznets curves
  • UN Rio convention
  • Policy events
  • Oil shocks
  • Intervention analysis
  • Structural breaks

JEL Classification

  • C22
  • Q53