Epsilon Archive for Student Projects

Abstract

This paper revisits the Environmental Kuznets Curve (EKC) hypothesis through the lens of spatial econometrics to analyse the relationship between income and emissions of CO, CO2, and CH4 in Swedish municipalities from 2015 to 2021. By incorporating spatial dependencies and allowing for heterogeneous effects across municipalities,this study addresses criticisms of previous EKC research. The analysis reveals an inverted U-shaped relationship between income and emissions in a significant number of municipalities: 177 for CO, 126 for CO2, and 146 for CH4. The study highlights the importance of spatial econometric models in capturing nuanced income-emissions relationships and spatial spillover effects, often neglected in non-spatial models. Policy implications suggest that economic growth alone is insufficient for reducing emissions across all municipalities, necessitating tailored policies that consider local economic and environmental contexts.