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All Journal Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan
Malik Cahyadin
Faculty of Economics and Management, Universiti Kebangsaan Malaysia
Economics, Econometrics & Finance

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New Evidence of Environmental Kuznets Curve Hypothesis in Developing Countries Malik Cahyadin; Vita Kartika Sari; Aulia Hapsari Juwita
Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan Vol 22, No 2 (2021): JEP 2021
Publisher : Muhammadiyah University Press

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.23917/jep.v22i2.15794

Abstract

New indexes of environment and institutions are constructed following principal component analysis (PCA), while non-linear panel regression is employed. This study attempts to estimate a non-linear impact of GDP per capita on the environment following the Environmental Kuznets Curve (EKC) Hypothesis for 97 developing countries during 1991-2014. The study reveals that a traditional EKC shows a U-shaped relationship under static panels, with both quadratic and cubic regressions. Interestingly, the inverted U-shaped occurs when a traditional EKC is estimated by the dynamic panels, with both quadratic and cubic regressions. Moreover, the EKC model is inverted U-shaped following static and dynamic panels, with both quadratic and cubic regressions under institutions. Indeed, the institutions significantly contribute to express EKC in developing countries. Policymakers should formulate environmental policies following climate change mitigation in the environmental sustainability framework, improve the quality of institutions, and increase macroeconomic management to anticipate external shocks such as openness, globalization, and FDI inflows.
Co-Authors Aulia Hapsari Juwita Vita Kartika Sari