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Title page 1

Contents 1

1. Introduction 2

2. Literature review 3

3. Data and methodology 6

3.1. Data 6

3.2. Empirical model 8

4. Results 9

4.1. The EKC hypothesis at the global and regional level 9

4.2. The role of environmental regulation 12

5. Conclusions 16

References 17

Figures 6

Figure 1. Level of CO₂ emissions (average by year across a sample of 191 countries) 6

Figure 2. Evolution of carbon taxes and ETS (average across countries) 8

Figure 3. Baseline results (country-level analysis) 10

Figure 4. Heterogeneity: advanced vs. emerging countries 11

Figure 5. Baseline results (regional-level analysis) 12

Figure 6. The mediating role of CCPs: index combining carbon tax and ETS 13

Figure 7. The mediating role of CCPs: EPS, market-based EPS, non-market-based EPS 14

Figure 8. The mediating role of CCPs (regional-level analysis) 15