The environmental Kuznets curve for carbon dioxide in India and China: Growth and pollution at crossroad

This study probes cointegration among carbon dioxide (CO2) emissions, economic activity, energy use, and trade, and examines the environmental Kuznets curve (EKC) hypothesis. We undertake a comparative analysis between India and China over the period 1971-2012 by using the autoregressive distributed lag model of Pesaran et al. (2001). This study establishes a long-run effect of economic activity and trade openness and a short-run effect of energy use on CO2 emissions. It shows the N-shaped relationship between CO2 emissions and economic activity, a departure from the EKC hypothesis. The study ends with policy advisory for balancing between growth and environment.