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Environmental Kuznets curve hypothesis: asymmetry analysis and robust estimation under cross-section dependence
Cheong-Fatt Ng1, Chee-Keong Choong2, Lin-Sea Lau2
1Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Jalan Universiti, Bandar Barat, 31900, Kampar, Perak Darul Ridzuan, Malaysia. ngcf@utar.edu.my.
Environmental Science and Pollution Research International
|March 25, 2020
Summary
The environmental Kuznets curve (EKC) hypothesis shows moderate support across 76 countries, with varied results depending on estimation methods. The EKC does not universally apply, necessitating tailored energy and economic policies.
Area of Science:
- Environmental Economics
- Econometrics
- Sustainable Development
Background:
- The environmental Kuznets curve (EKC) hypothesis posits an inverted U-shaped relationship between environmental degradation and economic development.
- Previous studies often overlook cross-sectional dependency (CSD) and asymmetry, potentially biasing EKC hypothesis estimations.
- Understanding the EKC's applicability is crucial for designing effective environmental and economic policies.
Purpose of the Study:
- To re-examine the environmental Kuznets curve (EKC) hypothesis using advanced econometric techniques.
- To account for cross-sectional dependency (CSD) and asymmetry effects in a large panel of 76 countries.
- To provide country-specific insights and policy recommendations.
Main Methods:
- Panel data analysis for 76 countries from 1971-2014.
- Cross-sectional dependency (CSD) and asymmetry were addressed using estimators like CCEMG, AMG, and PMG.
- Country-specific estimations were performed to identify individual EKC support.
Main Results:
- Moderate support for the EKC hypothesis was found across the sample.
- CCEMG estimator indicated EKC support in 16 countries, while AMG found support in 24 countries.
- Eleven countries consistently showed an inverted U-shaped curve across different estimators, highlighting specific country dynamics.
Conclusions:
- The environmental Kuznets curve (EKC) hypothesis is not universally applicable to all countries.
- Country-specific economic structures and policies influence the relationship between development and environmental quality.
- Tailored energy and economic policies are recommended, considering the diverse patterns observed.
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