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This paper examined the causal relationship between economic growth and carbon dioxide emissions (CO2) in Rwanda using annual data from 1960–2014. The study was conducted within the framework of the environmental Kuznets curve (EKC) hypothesis using the rolling-window bootstrap Granger causality test approach with a rolling-window size of 15 years. The methodology allows for non-constancy in the parameters of the vector autoregression (VAR) model in the short run as well as in the long run. The study found bi-direction causality between the real gross domestic product (GDP) and CO2 emissions in metric tons per capita. The results from the rolling-window bootstrap Granger causality test show that GDP negatively influenced CO2 emissions in the 1976–1977, 1990–1993, 2005–2006, and 2007–2013 sub-sample periods. This result depicts a monotonically decreasing EKC, contrary to the standard EKC relationship. The downward-sloping EKC was explained by the transition of the Rwandan economy from an industrial-based economy to a service-based economy. Further, a feedback effect from CO2 emissions to the economy was established.

Does the Environmental Kuznets Curve for CO2 Emissions Exist for Rwanda? Evidence from Bootstrapped Rolling-Window Granger Causality Test