Environmental Kuznets curve hypothesis: asymmetry analysis and robust estimation under cross-section dependence

Ng, Cheong-Fatt; Choong, Chee-Keong; Lau, Lin-Sea

Environmental Kuznets curve hypothesis: asymmetry analysis and robust estimation under cross-section dependence

2020

Ng, Cheong-Fatt | Choong, Chee-Keong | Lau, Lin-Sea

In this paper, we revisit the environmental Kuznets curve (EKC) hypothesis by using estimations that account for cross-sectional dependency (CSD) and asymmetry effect in 76 countries for the period 1971–2014. Our results lend moderate support to the EKC hypothesis. The country-specific results unfold that a total of 16 out of 76 countries support the EKC hypothesis using CCEMG estimator. Results from AMG reveal that the EKC hypothesis holds in 24 out of 76 countries. It is worth highlighting that 11 countries (Australia, China, Congo Dem. Rep., Costa Rica, Gabon, Hong Kong, India, Korea, Myanmar, Turkey, and Uruguay) exhibit an inverted U-shaped curve regardless of whether CCEMG or AMG is used. The asymmetry analysis using PMG is also able to support the EKC hypothesis. We conclude that the EKC hypothesis does not fit all countries. Policy implication and recommendation in designing appropriate energy and economic policies are provided.

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