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Studies in Nonlinear Dynamics & Econometrics

Ed. by Mizrach, Bruce

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Volume 18, Issue 5


Nonlinearity, heterogeneity and unobserved effects in the carbon dioxide emissions-economic development relation for advanced countries

Antonio Musolesi / Massimiliano Mazzanti
Published Online: 2013-12-10 | DOI: https://doi.org/10.1515/snde-2012-0082


We study long run carbon dioxide emissions-economic development relationships for advanced countries grouped in policy relevant groups: North America and Oceania, South Europe, North Europe. By relying on recent advances on Generalized Additive Mixed Models (GAMMs) and adopting interaction models, we handle simultaneously three main econometric issues, named here as functional form bias, heterogeneity bias and omitted time related factors bias, which have been proved to be relevant but have been addressed separately in previous papers. The model incorporates nonlinear effects, eventually heterogeneous across countries, for both income and time. We also handle serial correlation by using autoregressive moving average (ARMA) processes. We find that country-specific time related factors weight more than income in driving the northern EU Environmental Kuznets. Overall, the countries differ more on their carbon-time relation than on the carbon-income relation which is in almost all cases monotonic positive. Once serial correlation and (heterogeneous) time effects have been accounted for, only three Scandinavian countries – Denmark, Finland and Sweden – present some threshold effect on the CO2-development relation.

This article offers supplementary material which is provided at the end of the article.

Keywords: environmental Kuznets curve; generalized additive mixed models; interaction models; semiparametric models

JEL classification: C14; C23; Q53


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About the article

Corresponding author: Antonio Musolesi, INRA, Univ. Grenoble Alpes, UMR 1215 GAEL, F-38000 Grenoble, France, e-mail:

Published Online: 2013-12-10

Published in Print: 2014-12-01

Citation Information: Studies in Nonlinear Dynamics & Econometrics, Volume 18, Issue 5, Pages 521–541, ISSN (Online) 1558-3708, ISSN (Print) 1081-1826, DOI: https://doi.org/10.1515/snde-2012-0082.

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