We examine the empirical relation between CO2 emissions per capita and GDP per capita during the period 1960-1996, using a panel of 100 countries. Relying on the nonparametric poolability test of Baltagi et al. (1996), we find evidence of structural stability of the relationship. We then specify a nonparametric panel data model with country-specific effects. Estimation results show that this relationship is upward sloping. Nonparametric specification tests do not reject monotonicity but do reject the polynomial functional form which leads to the environmental Kuznets curve in several studies.
Azomahou, Théophile, Phu Nguyen Van and François Laisney (2005), Economic Development and CO2 Emissions: A Nonparametric Panel Approach , ZEW Discussion Paper No. 05-56, Mannheim.