The Existence of Environmental Kuznets Curve: Is it a Methodological Fact?

Abstract

Environmental Kuznets curve is believed to exist for some environmental indicators but not for others. Carbon dioxide, as a global pollutant, is also believed to be one among those indicators for which the environmental Kuznets curve hypothesis cannot be verified. Quadratic and cubic parametric models have been commonly used in the environmental Kuznets curve estimation. The models tend to fix the relationship, while curve estimations need flexibilities that can only be met non-parametrically as it leaves room for data to speak for themselves. This paper applies the Epanechnikov kernel function for local polynomial smoothing of emission-income relationships. The overall (panel) emission-income relationship is an inverted U-shaped curve. Each country, except Norway, has reached its unique turning point. Developing countries must adopt stricter antipollution policies to slow down environmental damages.

Keywords: Environmental Kuznets curve, nonparametric estimations, local polynomial smoothing, Epanechnikov kernel.