Carbon dioxide emissions and economic growth: Panel data evidence from developing countries

In this paper we test the Environment Kuznet's Curve (EKC) hypothesis for 43 developing countries. We suggest examining the EKC hypothesis based on the short- and long-run income elasticities; that is, if the long-run income elasticity is smaller than the short-run elasticity. We also examine the EKC hypothesis for panels of countries constructed on the basis of regional location using the panel cointegration and the panel long-run estimation techniques. We find that only for the Middle Eastern and South Asian panels, the income elasticity in the long run is smaller than the short run, implying that carbon dioxide emission has fallen with a rise in income.