Title: Rule of law and the environmental Kuznets curve: evidence for carbon emissions

Authors: Concetta Castiglione; Davide Infante; Janna Smirnova

Addresses: Department of Economics, Trinity College, Arts Building, Dublin 2, Ireland. ' Department of Economics and Statistics, University of Calabria, 87036, Campus di Arcavacata di Rende (Cosenza), Italy. ' Department of Economics and Statistics, University of Calabria, 87036, Campus di Arcavacata di Rende (Cosenza), Italy

Abstract: In response to the growing body of literature on the relationship between the environment and institutions, this study investigates how the rule of law influences the turning point of the environmental Kuznets curve (EKC). Using Bradford et al.'s (2005) and Leitão's (2010) alternative specification of the EKC that avoids non-linear transformation of potentially non-stationary regressors, we find evidence for the EKC in European countries for carbon emissions. Our results show a negative relationship between pollution and the rule of law, demonstrating that when the rule of law is strong, the turning point of the EKC occurs at a lower level of per capita income, thus, enhancing environmental preservation. Since the rule of law provides a composite institutional framework, we argue that the solution to environmental degradation can be sought not only through institutional reforms, but also through the allocation of additional resources to provide an adequate regulatory context in which this institution is enforced.

Keywords: environmental Kuznets curve; EKC; rule of law; carbon emissions; panel data; turning point; sustainable development; environmental pollution; CO2; carbon dioxide; environmental protection; sustainability; regulation.

DOI: 10.1504/IJSE.2012.047932

International Journal of Sustainable Economy, 2012 Vol.4 No.3, pp.254 - 269

Published online: 21 Nov 2014 *

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