Aspects of Governance and CO2 Emissions:

A Non-linear Panel Data Analysis
JournalEnvironmental and Resource Economics
PublishedJanuary 2018
Number of Pages167–194

The reduction of CO2 emissions has been at the centre of worldwide debates on environmental issues, though its inclusion as one of the millennium development goals (MDGs) by the United Nations has changed the focus of relative literature. Among many, one of the World Bank’s “recipes” to achieve a higher position toward MDGs has been to undertake reforms for a better governance. While, the majority of researchers’ focus has been on one single aspect and its relationship with the environment, some studies, have simultaneously considered two governance dimensions. In this paper, we focus on the role of several aspects of governance on CO2 emissions. This provides us with a chance to explore the possible impacts of all aspects of governance on a more direct measure of emissions, that is different to previous researches which have focused on the indirect transmission and considered the maximum of two. Using the IV method within panel data analysis, we show that only one single aspect of governance, Control of Corruption, has a negative significant effect on CO2 emissions and its effect has a non-linear relationship. The non-linearity exists in both parametric and nonparametric analysis after controlling for endogeneity.