Threshold Effect of Institutional Quality and the Validity of Environmental Kuznets Curve

Tajul Ariffin Masron and Yogeeswari Subramanian ()
Additional contact information
Yogeeswari Subramanian: School of Management, Universiti Sains Malaysia

Malaysian Journal of Economic Studies, 2020, vol. 57, issue 1, 81-112

Abstract: Using a threshold estimation technique, this study examines the validity of environmental Kuznets curve (EKC) under different institutional quality regimes. A combined set of 99 developed and developing countries over the period from 2008 to 2016 has been chosen to confirm the issue in hand. Adopting panel threshold regression technique by Hansen (1999), the paper finds evidence substantiating the presence of single threshold effect. In general, we find that EKC hypothesis does not hold in the full sample analysis, in which high income fails to bring environmental degradation down. Only in the case of a segregated sample of developed countries, we find that the impact of high income (or income square) on environmental degradation is negative and significant after a certain level of ‘high’ institutional quality has been attained. On the contrary, EKC is found to be invalid, and high income fails to be converted fully to environment-protecting activities in developing countries. Therefore, the effectiveness of income in mitigating environmental issues seems to be dampened by the poor institutional quality in developing countries.

Keywords: Environmental degradation; environmental Kuznets curve (EKC) hypothesis; institutional quality; threshold model (search for similar items in EconPapers)
JEL-codes: I38 O13 Q58 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mjr:journl:v:57:y:2020:i:1:p:81-112

DOI: 10.22452/MJES.vol57no1.5

Access Statistics for this article

Malaysian Journal of Economic Studies is currently edited by Lim Kian Ping

More articles in Malaysian Journal of Economic Studies from Faculty of Business and Economics, University of Malaya & Malaysian Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Malaysian Economic Association ().