Economic liberalization and CO2 emissions in Mexico: a time series analysis, 1972-2019

This article analyzes the process of economic liberalization in Mexico and its relationship with carbon dioxide emissions (CO2) in order to validate the hypothesis of the Environmental Kuznets Curve (EKC). Within the methodology, a time series model of non-stationary variables is used through error correction mechanisms (ECM) for the sub-periods 1972-1990, 1991-2006, and 2007-2019, accompanied by structural change, unit roots, and cointegration tests. The study demonstrates the existence of the EKC for Mexico, in addition, the positive effect of trade liberalization and public spending on CO2 emissions is verified; on the contrary, the participation of the industrial sector and the consumption of energy from fossil fuels contribute negatively to the reduction of CO2 emissions. Despite the results, CO2 emissions are still far from the required range, it is noted that the observed decline may be temporary as there continues to be sustained support for fossil fuels. Keywords: CO2 emissions; Environmental Kuznets Curve; economic liberalization; time series model; structural change JEL Classification: Q53, F18, C22