Growth dynamics and environmental pressure in Greece: Investigating the validity of EKC hypothesis

George Halkos and Argyro Zisiadou

MPRA Paper from University Library of Munich, Germany

Abstract: This study investigates the dynamic, long-run relationships between environmental degradation, measured by carbon dioxide (CO2) emissions, and a comprehensive set of macroeconomic determinants, including economic growth (GDP), energy consumption, trade openness and urbanization in Greece. Utilizing annual time-series data spanning the period 1970–2014, determines the direction of causality among variables. The empirical results provide strong evidence for the existence of a long-run equilibrium relationship between the variables. Specifically, the findings do not validate the Environmental Kuznets Curve (EKC) hypothesis for the Greek economy, identifying a statistically significant N-shaped relationship where environmental degradation initially rises with economic expansion before reaching a structural turning point (local maximun), subsequently declining reaching a second turning point (local minimum), followed by an additional rise. The causal analysis reveals a unidirectional linkage flowing from economic growth and energy consumption to CO2 in the long run, suggesting that Greece’s historical growth model has been energy-intensive. From a policy perspective, the study concludes that for Greece to sustain its downward environmental trajectory, it must shift toward a high-efficiency energy mix and decouple its GDP growth from carbon-intensive industrial activities, aligning with broader European Union climate mandates and the global transition toward a low-carbon economy.

Keywords: Environmental Kuznets Curve; Economic growth; environmental degradation; Greece; sustainability; CO₂ emissions. (search for similar items in EconPapers)
JEL-codes: C50 O20 Q01 Q52 Q53 Q56 Q58 (search for similar items in EconPapers)
Date: 2026-03-23
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:128430

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