Endogeneity and Nonlinearity in the Environmental Kuznets Curve: A Control Function Approach

Çağlayan Akay E., Uyar S. G. K.

Panoeconomicus, cilt.68, sa.4, ss.555-576, 2021 (SSCI)

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 68 Sayı: 4
  • Basım Tarihi: 2021
  • Doi Numarası: 10.2298/pan171009012c
  • Dergi Adı: Panoeconomicus
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, ABI/INFORM, Central & Eastern European Academic Source (CEEAS), EconLit, PAIS International, Directory of Open Access Journals
  • Sayfa Sayıları: ss.555-576
  • Marmara Üniversitesi Adresli: Evet

Özet

This study investigates the existence and shape of an environmental

Kuznets curve (EKC) across 16 developed countries and 58 developing countries

during the period 1995-2010. The basic model of the EKC is a polynomial

equation of real GDP per capita. The EKC model estimated for CO2 emission

per capita was extended by using control variables, such as trade, urban population,

fossil fuel consumption, and service sector. Based on the nonparametric

test of poolability of Badi H. Baltagi, Javier Hidalgo, and Qi Li (1996), the relationship

was found to have structural stability. A nonparametric pooled regression

model was constructed, which allowed functional form flexibility and considered

the endogeneity problem often emphasized in the EKC literature. The estimation

results show the nonexistence of an EKC for both groups. The study also

indicates the existence of nonlinearity and heterogeneity in the relationships between

CO2 emission and the control variables across both groups.