The increases and decreases of the environment Kuznets curve (EKC) for 8 OECD countries

Abstract

In this paper, we investigate the validity of the environmental Kuznets curve (henceforth, EKC) hypothesis for 8 OECD countries. To this aim, we decompose the per capita GDP series into its increases and decreases and consider only increases by excluding decreases from the model. Therefore, this method may enable us to test the EKC hypothesis more accurately, in accordance with the original theory. Following decomposition, we apply the fixed-effect regression model with Driscoll-Kraay standard errors, and the common correlated effects mean group (CCEMG) estimator. Empirical findings indicate that while the undecomposed model with undecomposed per capita GDP series supports the EKC hypothesis for 4 out of 8 countries, the decomposed model with decomposed per capita GDP series does not do so for any country. Hence, these mixed results reveal a need to employ different alternative techniques, such as the data transformation/decomposition applied in this study, for testing the EKC hypothesis.

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Data availability

The datasets generated and analyzed during the current study are available in the World Bank Indicator, Materialflows.net, World Intellectual Property Organization repository, http://data.worldbank.org.

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Contributions

Conceptualization, C.I., S.O., and D.O.; methodology, C.I., S.O., and D.O.; investigation, M.I. and A.O.; writing—original draft preparation, C.I., S.O., D.O., M.A., M.I., and A.O.; writing—review and editing, C.I., S.O., D.O., M.A., and M.I.; supervision, C.I. and S.O.; project administration, C.I.; funding acquisition, Anadolu University. All authors have read and agreed to the published version of the manuscript.

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Correspondence to Cem Isik.

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Isik, C., Ongan, S., Ozdemir, D. et al. The increases and decreases of the environment Kuznets curve (EKC) for 8 OECD countries. Environ Sci Pollut Res (2021). https://doi.org/10.1007/s11356-021-12637-y

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Keywords

  • EKC hypothesis
  • OECD countries
  • Fixed-effect regression with Driscoll-Kraay
  • CCEMG estimator
  • Data decomposition

Jel codes

  • P18
  • P28
  • Q40
  • Q43