R&D Intensity and Carbon Emissions in the G7: 1870-2014

We examine the effect of research and development (R&D) intensity on carbon dioxide (CO2) emissions in the Group of Seven (G7) countries since the nineteenth century using a non-parametric panel data model. Our estimates suggest that the relationship between R&D and CO2 emissions is time-varying. The estimated time-varying coefficient function of R&D was negative for three quarters of the period studied, but was positive for a 35-year period (1955-1990) during the second half of the twentieth century. Our non-parametric local linear estimates show that the common trend functions gradually increased for the first 110 years (1870-1980), but then flattened out and showed a slight decrease for the next three decades.