The Kuznets Environmental Curve Using Fractional Integration and Long Range Dependence Techniques

Abstract

This paper investigates empirically the Kuznets environmental curve in nineteen industrialized countries by using updated techniques in time series analysis and based on the concepts of long range dependence and fractional integration. Unlike most of the literature that focuses on integer degrees of differentiation, we consider more flexible approaches allowing, for example, for mean reverting nonstationary behaviour using fractional integration. The results indicate first that the orders of integration of the series substantially change across the series and the countries examined, and mean reversion is found in a number of cases. When looking at the relationship between emissions and economic activity, evidence of the Kuznets curve is found in some countries, this hypothesis being strongly supported in the cases of Denmark, Norway, Sweden, the UK and the USA.