This study looks at the behaviour of emissions when in disequilibrium with respect to the environmental Kuznets curve (EKC) relationship. We use the non-linear threshold cointegration and error correction methodology and a long dataset beginning in 1830, in an application to the United Kingdom. There is significant evidence that, not only does the 'inverse-U' shape hold between per capita CO2 and SO2 emissions and GDP per capita, but we also find that temporary disequilibrium from the long-run EKC is corrected in an asymmetric fashion. This may be due to the historical pressure of environmental regulation in the UK to reduce emissions that are higher than permitted. However further analysis suggests that technological change can partially account for the asymmetric adjustment. (C) 2012 Elsevier B.V. All rights reserved.
- Environmental Kuznets curve
- Nonlinear error correction