Economic growth, energy, and environmental Kuznets curve

The aim of this study is to investigate the relationship between income and Carbon Dioxide (CO2) emissions in the context of the Environmental Kuznets Curve (EKC), which posits the existence of an inverted U-shape relationship between environmental degradation and economic development. For this purpose, two empirical models are examined. For both models, the relationship between per capita income and per capita CO2 emissions and the relationship among per capita income, per capita energy use, and per capita CO2 emissions are analyzed respectively between 1980 and 2010, using the panel data estimation techniques with the application of Driscoll-Kraay Standard Errors. Yet, for the first model, data are analyzed for 26 OECD countries with high income levels, while for the second model, data are examined for 52 emerging countries. The results of both models show that N-shape and an inverted N-shape relationship for cubic functional form are observed. Thus, the results do not support the EKC hypothesis, which implies that environmental degradation cannot be solved automatically by economic growth.