Income inequality and CO2 emissions in the G7, 1870-2014: Evidence from non-parametric modelling

We examine whether income inequality effected carbon emissions in what are now the world's wealthiest countries over the period 1870-2014. Employing a non-parametric panel estimation method with cross-sectional and time-varying coefficients, we find that the relationship between income inequality and CO2 emissions is highly non-linear. In terms of signs and significance, the nonparametric coefficient function for income inequality is found to vary over the period 1870-2014. Income inequality exhibits a significant positive effect from 1870 to 1880 and a significant negative impact from 1950 to 2000 on CO2 emissions. We also find that for extended periods between 1881 and 1949 and between 2000 and 2014, there is no significant relationship between the two variables. (C) 2020 Elsevier B.V. All rights reserved.