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CO2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?

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Abstract

This paper analyzes the co-evolution of two major determinants of social welfare, namely, income and carbon emissions. In particular, by using a distribution dynamics approach based on Markov chains, we investigate the shape and behavior of the joint distribution of per-capita income and carbon dioxide emissions. We arrive at several interesting conclusions, especially in the context of international negotiations on climate change. First, evidence does not support theoretical models predicting the existence of a poverty-environment trap. Specifically, in the long-run two main groups of countries will emerge: poor versus polluting countries. Second, the typical development path leads initially to high emission levels and, subsequently, to high income. Third, the convergence process towards the stationary distribution is very slow. Finally, for carbon emissions, whenever it is observed, the environmental Kuznets curve seems to be only a transitory phenomenon.

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Authors and Affiliations

  1. Department of Economics “Marco Fanno” and Interuniversity Center for Growth and Economic Development (CICSE), University of Padova, Via del Santo 33, 35123, Padova, PD, Italy

    Thomas Bassetti

  2. Department of Economics, University of Ioannina, University Campus, 45110, Ioannina, Greece

    Nikos Benos

  3. Centre of Planning and Economic Research (KEPE), Amerikis 11, 10672, Athens, Greece

    Stelios Karagiannis

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  1. Thomas Bassetti
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  2. Nikos Benos
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  3. Stelios Karagiannis
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Correspondence to Thomas Bassetti.

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Bassetti, T., Benos, N. & Karagiannis, S. CO2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?. Environ Resource Econ 54, 101–125 (2013). https://doi.org/10.1007/s10640-012-9583-1

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