 Economic Development, Trade and Environmental Quality: Environmental Kuznets Curve Hypothesis in a Threshold ModelSavas Alpay No 331057, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Abstract: The proposed inverted U-type relationship between environmental degradation and per capita income (known as EKC hypothesis) has been re-examined in this paper. Previous studies on EKC hypothesis are criticised due to their assumption of the quadratic or cubic specification of pollution with respect to income per capita; it is unclear why the specific reduced-form equation employed in their estimations exists. An important contribution of our study is to overcome this problem by employing the threshold estimation method developed by Hansen (1996, 2000), which can directly and rigorously test EKC. We find no evidence for EKC hypothesis between pollution and income; increases in income reduce the load on the environment, but they do not lead to improvement in environmental quality. Most importantly, for the first time in the literature we take openness to trade as the threshold variable, rather than GDP per capita, and test for an EKC-type behavior. Our results present a weak support for the hypothesis that higher openness lead to improved environmental conditions. Keywords: International Relations/Trade; Environmental Economics and Policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331057 Access Statistics for this paper More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC. |
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