Environmental Kuznets curve in Southeastern Europe: the role of urbanization and energy consumption

Verbič, Miroslav; Satrovic, Elma; Muslija, Adnan

Environmental Kuznets curve in Southeastern Europe: the role of urbanization and energy consumption

2021

Verbič, Miroslav | Satrovic, Elma | Muslija, Adnan

This paper investigates the dynamic short-term and long-term relationships among real GDP per capita, energy consumption, urbanization, and carbon dioxide emissions within the framework of the environmental Kuznets curve (EKC) hypothesis for Southeastern Europe (SEE) from 1997 to 2014. The evidence highlights an inverted U-shaped nexus between real GDP per capita and carbon dioxide emissions (i.e., the EKC hypothesis is verified in the long-run in the sample as a whole). The short-run estimates provide evidence of inverted U-shaped EKC only for Greece and Moldova. Two-way causal relationship between urbanization and pollutant emission was also established in the short-run, as well as one-way causality flowing from real GDP per capita to pollutant emission. The coefficients with the real GDP per capita and energy consumption are negative and statistically significant in the long-term. These findings indicate the existence of an error correction mechanism that drives the observed variables back to their equilibrium. Moreover, the findings show that the consistent increase in energy consumption has not reduced environmental pressures.

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