Economic growth and CO2 emissions: a nonparametric approach

This paper examines the empirical interplay between economic growth and greenhouse gas emissions using panel data. Relying on nonparametric methods, we find evidence supporting specifications which assume the constancy of the relationship between CO2 emissions and GDP per capita during the period of the study. Moreover, the usually adopted polynomial functional form is rejected against our nonparametric modelling. It is shown that the relationship between gas emissions and GDP displays more complex patterns, despite its monotonous shape, than the well-known Kuznets curve obtained from ad hoc parametric specifications. The economic development process has a negative effect on gas emissions, especially for the early and the advanced stages of development. As a result, developed countries as well as developing countries should make efforts to reduce CO2 emissions.