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Professor David Stern and his co-authors investigate the relationship between emissions and income in terms of long-run growth rates. They find that the environmental Kuznets effect, convergence, and time effects are important determinants of emissions growth.
The long-run average growth rates of per capita carbon dioxide emissions and GDP per capita are positively correlated, though the rate of emissions intensity reduction varies widely across countries. The conventional approach to investigating these relationships involves panel regression models of the levels of the variables, which are plagued by unit root and cointegration issues as well as the difficulty of identifying time effects. This paper adopts a new representation of the data in terms of long-run growth rates, which allows us to test multiple hypotheses about the drivers of per capita emissions of pollutants in a single framework. It avoids the econometric issues associated with previous approaches and allows us to exploit the differences in growth performance across countries. We also apply our new approach to sulfur emissions. The results show among all that scale, environmental Kuznets effect, convergence, and, for sulfur, time effects are important in explaining emissions growth.