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The Myth of the Environmental Kuznets Curve: Second Generation Panel Approach for MIST Countries

Year 2022, Volume: 6 Issue: 3, 3199 - 3214, 30.09.2022
https://doi.org/10.29023/alanyaakademik.1018273

Abstract

The focus of the empirical analysis in this paper is to investigate the orthodox idea of “grow first, clean next” promoted by the Environmental Kuznets Curve hypothesis. In this respect, we examined the relation between CO2 emissions and economic growth for MIST countries for the period spanning from 1971 to 2016. With the help of second-generation panel data techniques, we employed the PANICCA unit root test, Durbin-Hausman Panel Cointegration test, and used the AMG estimator approach. The results strongly support a monotonously increasing relationship between CO2 emissions and economic growth. For the entire group and individually for Indonesia and Turkey, CO2 emissions per capita rise perilously as real GDP per capita increases.

References

  • AGRAS, J., and CHAPMAN, D. (1999). “A Dynamic Approach to the Environmental Kuznets Curve Hypothesis’’. Ecological Economics, 28(2), 267–277. https://doi.org/10.1016/S0921-8009(98)00040-8
  • AKBOSTANCI, E., TÜRÜT-AŞIK, S., and TUNÇ, G. I. (2009). “The Relationship Between Income and Environment in Turkey: Is There An Environmental Kuznets Curve? ’’. Energy Policy, 37(3), 861–867. https://doi.org/10.1016/j.enpol.2008.09.088
  • APERGIS, N., and PAYNE, J. E. (2009). “CO2 Emissions, Energy Usage, and Output in Central America’’. Energy Policy, 37(8), 3282–3286. https://doi.org/10.1016/j.enpol.2009.03.048
  • AZOMAHOU, T., LAISNEY, F., and NGUYEN VAN, P. (2006). “Economic Development and CO2 Emissions: A Nonparametric Panel Approach’’. Journal of Public Economics, 90(6–7), 1347–1363. https://doi.org/10.1016/j.jpubeco.2005.09.005
  • BAI, J., and NG, S. (2004). “A Panic Attack on Unit Roots and Cointegration’’. Econometrica, 72(4), 1127–1177. https://doi.org/10.1111/j.1468-0262.2004.00528.x
  • BAI, J., and NG, S. (2010). “Instrumental Variable Estimation in a Data Rich Environment’’. Econometric Theory, 26, 1577-1606. https://doi.org/10.1017/S0266466609990727
  • BAKIRTAS, I., and CETIN, M. A. (2017). “Revisiting the Environmental Kuznets Curve and Pollution Haven Hypotheses: MIKTA Sample’’. Environmental Science and Pollution Research, 24(22), 18273–18283. https://doi.org/10.1007/s11356-017-9462-y
  • BALTAGI, B. H. (2005). Econometric Analysis of Panel Data (Third Ed.). John Wiley and Sons, Ltd.
  • BECKERMAN, W. (1992). “Economic Growth and the Environment: Whose Growth? Whose Environment? ’’. World Development, 20(4), 481–496. https://doi.org/10.1016/0305-750X(92)90038-W
  • BREUSCH, T. S., and PAGAN, A. R. (1980). “The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics’’. Review of Economic Studies, 47(1), 239–253.
  • CAVIGLIA-HARRIS, J. L., CHAMBERS, D., and KAHN, J. R. (2009). “Taking the “U “ out of Kuznets. A Comprehensive Analysis of the EKC and Environmental Degradation’’. Ecological Economics, 68(4), 1149–1159. https://doi.org/10.1016/j.ecolecon.2008.08.006
  • CHOI, E., HESHMATI, A., and CHO, Y. (2010). “An Empirical Study of the Relationships between CO2 Emissions, Economic Growth and Openness’’. IZA Discussion Paper Series (Issue 5304).
  • DASGUPTA, S., LAPLANTE, B., WANG, H., and WHEELER, D. (2002). “Confronting the Environmental Kuznets Curve’’. The Journal of Economic Perspectives, 16(1), 147–168. https://doi.org/10.2307/2696580
  • DESTEK, M. A., and SARKODIE, S. A. (2019). “Investigation of Environmental Kuznets Curve for Ecological Footprint: The Role of Energy and Financial Development’’. Science of the Total Environment, 650, 2483–2489. https://doi.org/10.1016/j.scitotenv.2018.10.017
  • DıNDA, S. (2004). “Environmental Kuznets Curve Hypothesis: A Survey’’. Ecological Economics, 49(4), 431–455. https://doi.org/10.1016/j.ecolecon.2004.02.011
  • EBERHARDT, M., and BOND, S. (2009). “Cross-section Dependence in Nonstationary Panel Models: A Novel Estimator’’. Munich Personal RePEc Archive, 17692.
  • FINANCIAL TIMES (2011), “Bric Creator Adds Newcomers to List’’. By Jennifer Hughes in, January 17 2011. Accessed on 17th December, 2019 through the link https://www.ft.com/content/f717c8e8-21be-11e0-9e3b-00144feab49a
  • FODHA, M., and ZAGHDOUD, O. (2010). “Economic Growth and Pollutant Emissions in Tunisia: An Empirical Analysis of the Environmental Kuznets Curve’’. Energy Policy, 38(2), 1150–1156. https://doi.org/10.1016/j.enpol.2009.11.002
  • FRED (2019). Federal Reserve Bank of St. Louis Economic Data. Accessed on 12th September, 2019 through the link https://fred.stlouisfed.org/
  • GALLAGHER, K. P. (2004). Free Trade and the Environment: Mexico, NAFTA, and Beyond. Stanford University Press. California.
  • GROSSMAN, G. M., and KRUEGER, A. B. (1991). “Environmental Impacts of a North American Free Trade Agreement’’. National Bureau of Economic Research Working Paper Series, No. 3914(3914), 1–57. https://doi.org/10.3386/w3914
  • GROSSMAN, G. M., and KRUEGER, A. B. (1995). “Economic Growth and the Environment’’. The Quarterly Journal of Economics, 110(2), 353–377.
  • HEIDARI, H., TURAN KATIRCIOǦLU, S., and SAEIDPOUR, L. (2015). “Economic Growth, CO2 Emissions, and Energy Consumption in the Five ASEAN Countries’’. International Journal of Electrical Power and Energy Systems, 64, 785–791. https://doi.org/10.1016/j.ijepes.2014.07.081
  • IBRD. (1992). World Development Report 1992: Development and the Environment. Oxford University Press.
  • KUZNETS, S. (1955). “Economic Growth and Income Inequality’’. The American Economic Reviewconomic, 45(1), 1–28.
  • OECD (2019). OECD Data. Accessed on 12th September, 2019 through the link https://data.oecd.org/air/air-and-ghg-emissions.htm
  • ONAFOWORA, O. A., and OWOYE, O. (2014). “Bounds Testing Approach to Analysis of the Environment Kuznets Curve Hypothesis’’. Energy Economics, 44, 47–62. https://doi.org/10.1016/j.eneco.2014.03.025
  • ÖZOKCU, S., and ÖZDEMİR, Ö. (2017). “Economic Growth, Energy, and Environmental Kuznets Curve’’. Renewable and Sustainable Energy Reviews, 72(November 2016), 639–647. https://doi.org/10.1016/j.rser.2017.01.059
  • PANAYOTOU, T. (1993). “Empirical Tests and Policy Analysis of Environmental Degradation at Different Stages of Economic Development’’. ILO Working Papers (Issue WP 238).
  • PANAYOTOU, T. (1997). “Demystifying the Environmental Kuznets Curve: Turning A Black Box into a Policy Tool’’. Environment and Development Economics, 2(4), 465–484. https://doi.org/10.1017/S1355770X97000259
  • PESARAN, M. HASHEM. (2004). “General Diagnostic Tests for Cross Section Dependence in Panels’’. In Cambridge Working Papers in Economics (Issue 0435). https://doi.org/10.17863/CAM.5113
  • PESARAN, M. HASHEM, ULLAH, A., and YAMAGATA, T. (2008). “A Bias-adjusted LM Test of Error Cross-Section Independence’’. Econometrics Journal, 11, 105–127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
  • PESARAN, M.H., and YAMAGATA, T. (2008). “Testing Slope Homogeneity in Large Panels’’. Journal of Econometrics, 142(1), 50–93. https://doi.org/10.1016/j.jeconom.2007.05.010
  • REESE, S., and WESTERLUND, J. (2016). “Panicca: Panic on Cross-Section Averages’’. Journal of Applied Econometrics, 31, 961–981. https://doi.org/10.1002/jae
  • SABOORI, B., SULAIMAN, J. BIN, and MOHD, S. (2012). “An Empirical Analysis of the Environmental Kuznets Curve for CO2 Emissions in Indonesia: The Role of Energy Consumption and Foreign Trade’’. International Journal of Economics and Finance, 4(2), 243–251. https://doi.org/10.5539/ijef.v4n2p243
  • SELDEN, T. M., and SONG, D. (1994). “Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions? ’’. Journal of Environmental Economics and Management, 27, 147–162.
  • SHAFIK, N. (1994). “Economic Development and Environmental Quality: An Econometric Analysis’’. Oxford Economic Papers, 46, 757–773. https://doi.org/10.1400/61750
  • SHAFIK, N., and BANDYOPADHYAY, S. (1992). “Economic Growth and Environmental Quality: Time Series and Cross-Country Evidence’’. In Background Paper for World Development Report 1992: Vol. WPS 904.
  • SONG, T., ZHENG, T., and TONG, L. (2008). “An Empirical Test of the Environmental Kuznets Curve in China: A Panel Cointegration Approach’’. China Economic Review, 19(3), 381–392. https://doi.org/10.1016/j.chieco.2007.10.001
  • STERN, D. I. (2003). “The Environmental Kuznets Curve’’. In International Society for Ecological Economics- Internet Encyclopaedia of Ecological Economics (Issue June). https://doi.org/10.1080/1350485042000207216
  • STERN, D. I. (2004). “The Rise and Fall of the Environmental Kuznets Curve’’. World Development, 32(8), 1419–1439. https://doi.org/10.1016/j.worlddev.2004.03.004
  • SUGIAWAN, Y., and MANAGI, S. (2016). “The Environmental Kuznets Curve in Indonesia: Exploring the Potential of Renewable Energy’’. Energy Policy, 98, 187–198. https://doi.org/10.1016/j.enpol.2016.08.029
  • WESTERLUND, J. (2008). “Panel Cointegration Tests for the Fisher Effect’’. Journal of Applied Econometrics, 23, 193–233. https://doi.org/10.1002/jae
  • WORLD BANK (2019). World Development Indicators. Accessed on 10th September, 2019 through the link https://databank.worldbank.org/reports.aspx?source=wdi-database-archives-%28beta%29#
  • ZOUNDI, Z. (2017). “CO2 Emissions, Renewable Energy and the Environmental Kuznets Curve, A Panel Cointegration Approach’’. Renewable and Sustainable Energy Reviews, 72(July 2016), 1067–1075. https://doi.org/10.1016/j.rser.2016.10.018

The Myth of the Environmental Kuznets Curve: Second Generation Panel Approach for MIST Countries

Year 2022, Volume: 6 Issue: 3, 3199 - 3214, 30.09.2022
https://doi.org/10.29023/alanyaakademik.1018273

Abstract

The focus of the empirical analysis in this paper is to investigate the orthodox idea of “grow first, clean next” promoted by the Environmental Kuznets Curve hypothesis. In this respect, we examined the relation between CO2 emissions and economic growth for MIST countries for the period spanning from 1971 to 2016. With the help of second-generation panel data techniques, we employed the PANICCA unit root test, Durbin-Hausman Panel Cointegration test, and used the AMG estimator approach. The results strongly support a monotonously increasing relationship between CO2 emissions and economic growth. For the entire group and individually for Indonesia and Turkey, CO2 emissions per capita rise perilously as real GDP per capita increases.

References

  • AGRAS, J., and CHAPMAN, D. (1999). “A Dynamic Approach to the Environmental Kuznets Curve Hypothesis’’. Ecological Economics, 28(2), 267–277. https://doi.org/10.1016/S0921-8009(98)00040-8
  • AKBOSTANCI, E., TÜRÜT-AŞIK, S., and TUNÇ, G. I. (2009). “The Relationship Between Income and Environment in Turkey: Is There An Environmental Kuznets Curve? ’’. Energy Policy, 37(3), 861–867. https://doi.org/10.1016/j.enpol.2008.09.088
  • APERGIS, N., and PAYNE, J. E. (2009). “CO2 Emissions, Energy Usage, and Output in Central America’’. Energy Policy, 37(8), 3282–3286. https://doi.org/10.1016/j.enpol.2009.03.048
  • AZOMAHOU, T., LAISNEY, F., and NGUYEN VAN, P. (2006). “Economic Development and CO2 Emissions: A Nonparametric Panel Approach’’. Journal of Public Economics, 90(6–7), 1347–1363. https://doi.org/10.1016/j.jpubeco.2005.09.005
  • BAI, J., and NG, S. (2004). “A Panic Attack on Unit Roots and Cointegration’’. Econometrica, 72(4), 1127–1177. https://doi.org/10.1111/j.1468-0262.2004.00528.x
  • BAI, J., and NG, S. (2010). “Instrumental Variable Estimation in a Data Rich Environment’’. Econometric Theory, 26, 1577-1606. https://doi.org/10.1017/S0266466609990727
  • BAKIRTAS, I., and CETIN, M. A. (2017). “Revisiting the Environmental Kuznets Curve and Pollution Haven Hypotheses: MIKTA Sample’’. Environmental Science and Pollution Research, 24(22), 18273–18283. https://doi.org/10.1007/s11356-017-9462-y
  • BALTAGI, B. H. (2005). Econometric Analysis of Panel Data (Third Ed.). John Wiley and Sons, Ltd.
  • BECKERMAN, W. (1992). “Economic Growth and the Environment: Whose Growth? Whose Environment? ’’. World Development, 20(4), 481–496. https://doi.org/10.1016/0305-750X(92)90038-W
  • BREUSCH, T. S., and PAGAN, A. R. (1980). “The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics’’. Review of Economic Studies, 47(1), 239–253.
  • CAVIGLIA-HARRIS, J. L., CHAMBERS, D., and KAHN, J. R. (2009). “Taking the “U “ out of Kuznets. A Comprehensive Analysis of the EKC and Environmental Degradation’’. Ecological Economics, 68(4), 1149–1159. https://doi.org/10.1016/j.ecolecon.2008.08.006
  • CHOI, E., HESHMATI, A., and CHO, Y. (2010). “An Empirical Study of the Relationships between CO2 Emissions, Economic Growth and Openness’’. IZA Discussion Paper Series (Issue 5304).
  • DASGUPTA, S., LAPLANTE, B., WANG, H., and WHEELER, D. (2002). “Confronting the Environmental Kuznets Curve’’. The Journal of Economic Perspectives, 16(1), 147–168. https://doi.org/10.2307/2696580
  • DESTEK, M. A., and SARKODIE, S. A. (2019). “Investigation of Environmental Kuznets Curve for Ecological Footprint: The Role of Energy and Financial Development’’. Science of the Total Environment, 650, 2483–2489. https://doi.org/10.1016/j.scitotenv.2018.10.017
  • DıNDA, S. (2004). “Environmental Kuznets Curve Hypothesis: A Survey’’. Ecological Economics, 49(4), 431–455. https://doi.org/10.1016/j.ecolecon.2004.02.011
  • EBERHARDT, M., and BOND, S. (2009). “Cross-section Dependence in Nonstationary Panel Models: A Novel Estimator’’. Munich Personal RePEc Archive, 17692.
  • FINANCIAL TIMES (2011), “Bric Creator Adds Newcomers to List’’. By Jennifer Hughes in, January 17 2011. Accessed on 17th December, 2019 through the link https://www.ft.com/content/f717c8e8-21be-11e0-9e3b-00144feab49a
  • FODHA, M., and ZAGHDOUD, O. (2010). “Economic Growth and Pollutant Emissions in Tunisia: An Empirical Analysis of the Environmental Kuznets Curve’’. Energy Policy, 38(2), 1150–1156. https://doi.org/10.1016/j.enpol.2009.11.002
  • FRED (2019). Federal Reserve Bank of St. Louis Economic Data. Accessed on 12th September, 2019 through the link https://fred.stlouisfed.org/
  • GALLAGHER, K. P. (2004). Free Trade and the Environment: Mexico, NAFTA, and Beyond. Stanford University Press. California.
  • GROSSMAN, G. M., and KRUEGER, A. B. (1991). “Environmental Impacts of a North American Free Trade Agreement’’. National Bureau of Economic Research Working Paper Series, No. 3914(3914), 1–57. https://doi.org/10.3386/w3914
  • GROSSMAN, G. M., and KRUEGER, A. B. (1995). “Economic Growth and the Environment’’. The Quarterly Journal of Economics, 110(2), 353–377.
  • HEIDARI, H., TURAN KATIRCIOǦLU, S., and SAEIDPOUR, L. (2015). “Economic Growth, CO2 Emissions, and Energy Consumption in the Five ASEAN Countries’’. International Journal of Electrical Power and Energy Systems, 64, 785–791. https://doi.org/10.1016/j.ijepes.2014.07.081
  • IBRD. (1992). World Development Report 1992: Development and the Environment. Oxford University Press.
  • KUZNETS, S. (1955). “Economic Growth and Income Inequality’’. The American Economic Reviewconomic, 45(1), 1–28.
  • OECD (2019). OECD Data. Accessed on 12th September, 2019 through the link https://data.oecd.org/air/air-and-ghg-emissions.htm
  • ONAFOWORA, O. A., and OWOYE, O. (2014). “Bounds Testing Approach to Analysis of the Environment Kuznets Curve Hypothesis’’. Energy Economics, 44, 47–62. https://doi.org/10.1016/j.eneco.2014.03.025
  • ÖZOKCU, S., and ÖZDEMİR, Ö. (2017). “Economic Growth, Energy, and Environmental Kuznets Curve’’. Renewable and Sustainable Energy Reviews, 72(November 2016), 639–647. https://doi.org/10.1016/j.rser.2017.01.059
  • PANAYOTOU, T. (1993). “Empirical Tests and Policy Analysis of Environmental Degradation at Different Stages of Economic Development’’. ILO Working Papers (Issue WP 238).
  • PANAYOTOU, T. (1997). “Demystifying the Environmental Kuznets Curve: Turning A Black Box into a Policy Tool’’. Environment and Development Economics, 2(4), 465–484. https://doi.org/10.1017/S1355770X97000259
  • PESARAN, M. HASHEM. (2004). “General Diagnostic Tests for Cross Section Dependence in Panels’’. In Cambridge Working Papers in Economics (Issue 0435). https://doi.org/10.17863/CAM.5113
  • PESARAN, M. HASHEM, ULLAH, A., and YAMAGATA, T. (2008). “A Bias-adjusted LM Test of Error Cross-Section Independence’’. Econometrics Journal, 11, 105–127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
  • PESARAN, M.H., and YAMAGATA, T. (2008). “Testing Slope Homogeneity in Large Panels’’. Journal of Econometrics, 142(1), 50–93. https://doi.org/10.1016/j.jeconom.2007.05.010
  • REESE, S., and WESTERLUND, J. (2016). “Panicca: Panic on Cross-Section Averages’’. Journal of Applied Econometrics, 31, 961–981. https://doi.org/10.1002/jae
  • SABOORI, B., SULAIMAN, J. BIN, and MOHD, S. (2012). “An Empirical Analysis of the Environmental Kuznets Curve for CO2 Emissions in Indonesia: The Role of Energy Consumption and Foreign Trade’’. International Journal of Economics and Finance, 4(2), 243–251. https://doi.org/10.5539/ijef.v4n2p243
  • SELDEN, T. M., and SONG, D. (1994). “Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions? ’’. Journal of Environmental Economics and Management, 27, 147–162.
  • SHAFIK, N. (1994). “Economic Development and Environmental Quality: An Econometric Analysis’’. Oxford Economic Papers, 46, 757–773. https://doi.org/10.1400/61750
  • SHAFIK, N., and BANDYOPADHYAY, S. (1992). “Economic Growth and Environmental Quality: Time Series and Cross-Country Evidence’’. In Background Paper for World Development Report 1992: Vol. WPS 904.
  • SONG, T., ZHENG, T., and TONG, L. (2008). “An Empirical Test of the Environmental Kuznets Curve in China: A Panel Cointegration Approach’’. China Economic Review, 19(3), 381–392. https://doi.org/10.1016/j.chieco.2007.10.001
  • STERN, D. I. (2003). “The Environmental Kuznets Curve’’. In International Society for Ecological Economics- Internet Encyclopaedia of Ecological Economics (Issue June). https://doi.org/10.1080/1350485042000207216
  • STERN, D. I. (2004). “The Rise and Fall of the Environmental Kuznets Curve’’. World Development, 32(8), 1419–1439. https://doi.org/10.1016/j.worlddev.2004.03.004
  • SUGIAWAN, Y., and MANAGI, S. (2016). “The Environmental Kuznets Curve in Indonesia: Exploring the Potential of Renewable Energy’’. Energy Policy, 98, 187–198. https://doi.org/10.1016/j.enpol.2016.08.029
  • WESTERLUND, J. (2008). “Panel Cointegration Tests for the Fisher Effect’’. Journal of Applied Econometrics, 23, 193–233. https://doi.org/10.1002/jae
  • WORLD BANK (2019). World Development Indicators. Accessed on 10th September, 2019 through the link https://databank.worldbank.org/reports.aspx?source=wdi-database-archives-%28beta%29#
  • ZOUNDI, Z. (2017). “CO2 Emissions, Renewable Energy and the Environmental Kuznets Curve, A Panel Cointegration Approach’’. Renewable and Sustainable Energy Reviews, 72(July 2016), 1067–1075. https://doi.org/10.1016/j.rser.2016.10.018
There are 45 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Makaleler
Authors

Sevginaz Işık 0000-0002-4123-0860

Publication Date September 30, 2022
Acceptance Date June 27, 2022
Published in Issue Year 2022 Volume: 6 Issue: 3

Cite

APA Işık, S. (2022). The Myth of the Environmental Kuznets Curve: Second Generation Panel Approach for MIST Countries. Alanya Akademik Bakış, 6(3), 3199-3214. https://doi.org/10.29023/alanyaakademik.1018273