Revisiting the Environmental Kuznets Curve hypothesis in OECD countries: the role of renewable, non-renewable energy, and oil prices

Erdogan, Sinan; Okumus, Ilyas; Guzel, Arif Eser

Revisiting the Environmental Kuznets Curve hypothesis in OECD countries: the role of renewable, non-renewable energy, and oil prices

2020

Erdogan, Sinan | Okumus, Ilyas | Guzel, Arif Eser

Environment-economic growth nexus is one of the main concerns of the researchers in the modern era. Although there are several studies in this field, discussions are far from being reached a consensus. The main purpose of this study is to investigate the role of economic growth, renewable and non-renewable energy consumption, oil prices, and trade openness on CO2 emissions in 25 Organization for Economic Co-operation and Development (OECD) countries over the period 1990–2014. We provide a comparative panel data evidence using both the first- and second-generation estimation methods. The Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimations indicate that the Environmental Kuznets Curve (EKC) hypothesis is valid in OECD countries. However, the Augmented Mean Group (AMG) estimator revealed that the EKC hypothesis is invalid. The AMG estimator is a second-generation estimator and provides robust results under cross-sectional dependence compared to the first-generation methods; therefore, the EKC hypothesis is invalid. Our additional findings show that rising renewable energy consumption and oil prices mitigate CO2 emissions while non-renewable energy consumption increases it according to all estimators. No significant relationship is found between trade openness and CO2 emissions.

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