Revisiting the environmental kuznets curve hypothesis: evidence from the ASEAN-5 countries with structural breaks

ABSTRACT

This paper tests if the Environmental Kuznets Curve (EKC) hypothesis exists for ASEAN-5 countries in an annual sample data that covers 1971–2013, by utilizing Auto Regressive Distributed Lag (ARDL) methodology. The empirical findings give support for the EKC hypothesis for Thailand only, after considering the structural breaks. Furthermore, the paper tests the EKC hypothesis for a panel data of the ASEAN-5 by adopting the Pooled Mean Group (PMG) methodology. The results show that the long-run estimates provide no evidence for the EKC hypothesis. Finally, the paper examines the causality between the CO₂ emissions and GDP. For individual countries, bidirectional causality was found in the case of Thailand and Malaysia, plus unidirectional causality running from GDP and squared GDP to CO₂ emissions was found for Indonesia, but a unidirectional causality running from CO₂ emissions to GDP and squared GDP was found for the Philippines, however, no causality effect was found for Singapore. Furthermore, the pairwise Dumitrescu and Hurlin Panel Causality test show a bidirectional effect between CO₂ emissions and both GDP in addition to squared GDP.

KEYWORDS:

• Environment kuznets curve
• CO2 emissions
• ARDL
• ASEAN-5

JEL CLASSIFICATION:

• O13
• O53
• Q52

Acknowledgments

Thanks are due to the anonymous reviewers of the Journal for their useful comments and helpful suggestions on the earlier version of this paper. We are also grateful to the Editor of the Journal, Mark Taylor, for his encouragement. The usual caveats apply.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ For example see: Ang (2008, 2009); Soytas, Sari, and Ewing (2007); Jalil and Mahmud (2009); Halicioglu (2009) and Shahbaz, Lean, and Shabbir (2012).:

² For more details about the ARDL testing procedure, see Kisswani (2016).

³ For more information about Pooled Mean Group (PMG) estimation, see Pesaran and Smith (1995) and Pesaran, Shin, and Smith (1999).

⁴ For more details, see Bai and Perron (1998).