A Reexamination of the Environmental Kuznets Curve Hypothesis

Abstract

The environmental Kuznets curve (EKC) hypothesis proposes that the indicators of environmental degradation first rise and then fall with increasing income per capita. Since this hypothesis was presented as evidence against the limit to growth, it attracted considerable attention and many empirical studies have emerged from the early 1990s. However, recently, some controversial studies have questioned the robustness of these studies. Therefore, this study reexamines the validity of this hypothesis more robustly by applying the parametric approach of instrumental variables estimation and seemingly unrelated regression, and the nonparametric approach. Specifically, we use panel datasets of two environmental indicators of SO₂ and CO₂ for about 90 countries. Then, the future policy implications of the EKC are provided for discussions.