The nonlinear links between urbanization and CO2 in 15 emerging countries: Evidence from unconditional quantile and threshold regression

Abstract

The extant literature has provided empirical evidence about the relationship between urbanization and the environment; however, little attention has been paid to the non-linear relationship among them. This study aims to measure the effects of urbanization on carbon dioxide emission using quantile and threshold regression methods. To this end, the study employed threshold analysis and quantile regression methods in a sample of 15 emerging economies from 1995 to 2015 and analyzed the variation of such non-linearity at different levels of carbon dioxide. The results illustrate that a single threshold and two regimes exist and the threshold for urbanization is 29.56%. Among the two regimes, the elasticity estimates form an inverted U-shape impact of urbanization on carbon dioxide emission. The increase in the marginal effect of urbanization on carbon dioxide emissions up to the median level and a declining trend after this level implies that environmental quality is likely to improve in the emerging countries.

Keywords: CO2; Emerging countries; Threshold Panel Unconditional Quantile Regression; Urbanization.