Economics and Environmental Development: Testing the Environmental Kuznets Curve Hypothesis

Ni Putu Wiwin Setyari, Wayan Gita Ayu Kusuma


The Environmental Kuznets Curve (EKC) shows the relationship between economic development, which is proxied in per capita income, and environmental quality. This study aims to view the existence of the EKC by arranging the distribution of 62 countries into four sub-samples based on per capita income from 1992 to 2017. By applying panel data, the model uses the Error Correction Mechanism (ECM) method to see the effect of economic growth on environmental quality (CO2 emission) in both the short and the long term. The results show that the EKCs on our four sub-samples used are not conclusive, and are more likely to refer to the ā€œNā€ pattern. This result confirms that the impetus of development at a higher level will lead to a degradation of environmental quality. Therefore, policy intervention becomes an important thing.

Keywords: Macroeconomics, Government Policy, Sustainable Economic Growth, Environmental Economics, Panel Data

JEL Classifications: R11, Q58, Q56


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