The Environmental Kuznets Curve in the OECD: 1870–2014

Highlights: • We test the Environmental Kuznets Curve (EKC) hypothesis for OECD nations. • We use data that dates back to the first globalization boom in the nineteenth century. • Our estimators account for cross-sectional dependence and parameter heterogeneity. • We find support for the EKC hypothesis for the panel as a whole. • Country-specific results provide mixed support for the EKC hypothesis. - Abstract: Carbon dioxide (CO₂) emissions play an important role in global warming. Consequently, studying the relationship between CO₂ emissions and economic development is important, especially when viewed from a historical perspective. We test the Environmental Kuznets Curve (EKC) hypothesis for a panel of 20 OECD nations, dating back to the first globalization boom in the nineteenth century. Utilising recently developed panel data estimators that account for cross-sectional dependence and parameter heterogeneity, for the period 1870 to 2014, we find support for the EKC hypothesis for the panel as a whole with three of our preferred four estimators, with turning points in income per capita that lie between $18,955 and $89,540 (in 1990 US$). Country-specific results, however, only provide mixed support for the EKC hypothesis. Specifically, we find evidence of an EKC for nine of the 20 countries, with five exhibiting a traditional inverted U-shaped relationship, three exhibiting an N-shaped relationship and one, an inverted N-shaped relationship.