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

Halkos, George and Zisiadou, Argyro (2026): Growth dynamics and environmental pressure in Greece: Investigating the validity of EKC hypothesis.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Environmental Kuznets Curve; Economic growth; environmental degradation; Greece; sustainability; CO₂ emissions.
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C50 - General; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General > Q01 - Sustainable Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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