Title: A panel approach for causalities and the distribution between income inequality and carbon emissions
Authors: Franziska Dorn - University of Goettingen (Germany) [presenting]
Simone Maxand - University of Helsinki (Finland)
Thomas Kneib - University of Goettingen (Germany)
Abstract: High levels of carbon emissions and rising income inequality are two of the greatest challenges in the global society. Recent literature has investigated this relationship by primarily establishing linear regressions. The aim is to add twofold to the debate of causal relationship and the interdependence between carbon dioxide emissions and income inequality. First, a panel vector autoregressive regression model is implemented to establish causal inference between carbon dioxide emissions and income inequality. This technique enables to model the dynamic bilateral relation between the two dimensions and accounts for varying time effects. Second, distributional copula models are used to analyze the conditional dependence between the two dimensions. By using generalized additive models for location, scale and shape, the variation of the covariates along the distribution of the outcome variable is analyzed. First results show that the dependence and causalities between the two dimensions vary by different macro-economic contexts of countries. A comparison of high-, middle-, and low- income countries indicates that the dependence structure changes with the level of income. However, the relationship is negative in all countries, which states that gains in one dimension come at the cost of the other.