Problems estimating the carbon Kuznets curve

We discover flaws in the foundations of a recent strand of literature estimating the carbon Kuznets curve (CKC). The CKC hypothesizes that carbon dioxide emissions initially increase with economic growth but that the relationship is eventually reversed. The recent literature attempts to estimate the CKC by adding energy consumption as a control variable. Due to model misspecifications related to the econometric methodology and database definitions, the results are biased to support the existence of a CKC. Consequently the literature underestimates the need for climate policies.

► Recent literature estimating the carbon Kuznets curve is criticized. ► Neglecting an accounting identity in the energy data undermines the results. ► The criticized literature underestimates the need for climate policies.