On the nonlinear relationship between energy use and CO2 emissions within an EKC framework: Evidence from panel smooth transition regression in the MENA region

By Nidhaleddine Ben Cheikh, Y. Zaied, Julien Chevallier. Research In International Business and Finance, 2021

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Abstract This paper proposes a new approach for analyzing the dynamic relationships between carbon dioxide (CO2) emissions, energy use, and income for the Middle East and North African (MENA) region. Our study implements a class of regime-switching models, namely a nonlinear panel smooth transition regression (PSTR) framework. Two kinds of estimates for carbon emissions are provided. On the one hand, we measure the impact of energy consumption on CO2 concerning the level of income per capita, as countries with a similar energy usage level would have different levels of energy intensity. On the other hand, we estimate the impact of output growth on emissions concerning energy usage variation, as a higher economic growth does not necessarily mean energy-intensive activities. Our empirical findings support these intuitions as they indicate that pollutant emissions respond nonlinearly to energy consumption and GDP growth. We find an inverted U-shaped pattern for the impact of energy on CO2, in the sense that environmental degradation is declining beyond a given income threshold, which is estimated endogenously within the PSTR model. Also, our results underscore that GDP growth significantly impacts carbon emissions only for higher energy consumption growth.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/ea7aea684ac099c684ddb79946cf0e5f03e7d7db