A Spatial Dynamic Panel Analysis of the Environmental Kuznets Curve in European Countries

Previous studies in the environmental Kuznets curve have overlooked spatial interdependence and this could bias the estimates. This paper therefore addresses the issue of spatial interdependence in the environmental Kuznets curve by using panel data on European countries over the period of 1961-2009. The results obtained from the spatial dynamic panel suggest a significant degree of persistence in the per capita CO2 emissions in European countries over time. Furthermore, it has been found that per capita CO2 emissions in a nearby country lead to a domestic increase in per capita CO2 emissions and overall, the results are robust irrespective of the concept of neighborhood.