Environmental Kuznets Curve in Romania and the Role of Energy Consumption

Muhammad, Shahbaz and Mihai, Mutascu and Parvez, Azim (2011): Environmental Kuznets Curve in Romania and the Role of Energy Consumption.

Abstract

The aim of present study is to probe the dynamic relationship between economic growth, energy consumption and CO2 emissions for period of 1980-2010 in case of Romania. In doing so, ARDL bounds testing approach is applied to investigate the long run cointegration between these variables. Our results confirm long run relationship between economic growth, energy consumption and energy pollutants. The empirical evidence reveals that Environmental Kuznets curve (EKC) is found both in long-and-short runs in Romania. Further, energy consumption is major contributor to energy pollutants. Democratic regime shows her significant contribution to decline CO2 emissions through effective implementation of economic policies and financial development improves environment i.e. reduces CO2 emissions by redirecting the resources to environment friendly projects.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic Growth, Energy Consumption, Environment
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models

References

J. van der Geer, J.A.J. Hanraads, R.A. Lupton, The art of writing a scientific article, J. Sci. Commun. 163 (2000) 51–59.

S. Kuznets, Economic growth and income inequality, Am. Econ. Rev. 49 (1955) 1–28.

G. Grossmann, A. Krueger, Environmental impact of a North American Free Trade Agreement, NBER Working paper, 3914 (1991).

G. Grossmann, A. Krueger, Economic growth and the environment, Q. J. Econ. 110 (1995) 353-377.

T. Panayotou, Empirical tests and policy analysis of environmental degradation at different stages of economic development, Geneva, Switzerland: International Labour Office, Working Paper, WP238 (1993).

T. Panayotou, Economic growth and the environment, Harvard University, CID Working Paper, 56 (2000).

T. Selden, D. Song, Environmental quality and development: is there a Kuznets curve for air pollution emissions? J. Enviorn. Econ. Manag. 27 (1994) 147–162.

N. Shafik, S. Bandyopadhyay, Economic Growth and Environmental Quality: Time-Series and Cross-Country Evidence, World Bank Policy Research Working Paper, 904 (1992).

H. Hettige, R. Lucas, D. Wheeler, The toxic intensity of industrial production: global patterns, trends, and trade policy, Am. Econ. Rev. 82 (1992) 478-481.

G. Koop, Carbon dioxide emissions and economic growth: a structural approach, J. Appl. Stat. 25 (1998) 489-515.

D.I. Stern, The rise and fall of the environmental Kuznets curve, World Dev. 32 (2004) 1419–1439.

B.R. Copeland, M.S Taylor, Trade, growth and the environment, J. Econ. Lit. 42 (2004) 7–71.

V. Jensen, The pollution haven hypothesis and the industrial flight hypothesis: some perspectives on theory and empirics, Working Paper, Centre for Development and the Environment, University of Oslo, 5 (1996).

P. Sadorsky, The impact of financial development on energy consumption in emerging economies, Energy Policy 38 (2010) 2528-2535.

A. Jalil, M. Feridun, The impact of growth, energy and financial development on the environment in China: A cointegration analysis. Energy Econ. 33 (2011) 284-291.

T. Luzzati, M. Orsini, Investigating the energy-environmental Kuznets curve, Energy 34 (2009) 291-300.

A. Acaravci, I. Ozturk, On the relationship between energy consumption, CO2 emissions and economic growth in Europe, Energy, 35 (2010) 5412-5420.

M. Fodha, O. Zaghdoud, Economic growth and pollutant emissions in Tunisia: An empirical analysis of the environmental Kuznets curve, Energy Policy 38 (2010) 1150-1156.

I. Martinez-Zarzoso, A. Bengochea-Morancho, Pooled mean group estimation of an environmental Kuznets curve for CO2, Econ. Lett. 82 (2004) 121-126.

M. Galeotti, A. Lanza, F., Pauli, Reassessing the environmental Kuznets curve for CO2 emissions: A robustness exercise, Ecol. Econ. 57 (2006) 152– 163.

D. Romero-Ávila, Questioning the empirical basis of the environmental Kuznets curve for CO2: New evidence from a panel stationarity test robust to multiple breaks and cross-dependence, Ecol. Econ. 64 (2008) 559-574.

A. Jalil, S. Mahmud, Environment Kuznets curve for CO2 emissions: A cointegration analysis for China, Energy Policy 37 (2009) 5167-5172.

P. He, P. Richard, Environmental Kuznets curve for CO2 in Canada, Ecol. Econ. 69 (2010) 1083-1093.

H. Iwata, K. Okada, S. Samreth, Empirical study on the environmental Kuznets curve for CO2 in France: The role of nuclear energy, Energy Policy 38 (2010) 4057-4063.

M. Shahbaz, H.H. Lean, S.M. Shabbir, Environmental Kuznets Curve and The Role Of Energy Consumption in Pakistan, Development Research Unit Discussion Paper DEVDP 10/05 (2010).

M. Nasir, F. Rehman, Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation, Energy Policy, 39 (2011) 1857-1864.

C. Atici, Carbon Emissions in Central and Eastern Europe: Environmental Kuznets Curve and Implications for Sustainable Development, Sustain. Dev. 17 (2009) 155-160.

A. Tamazian, B. Rao, Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies, Energy Econ. 32 (2010) 137-145.

I. Ozturk, A. Acaravci, Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies, Energy Econ., 32 (2010) 137-145.

R. Sova, I. Stancu, A. Sova, L. Fratila, V. Sava, Framework for Understanding Environmental Policy in Romania, MPRA Paper, 20630 (2010).

R. Chowdhury, E. Moran, Turning the curve: A critical review of Kuznets approaches, Appl. Geogr. 30 (2010) 1-9.

M. Kijima, K. Nishide, A. Ohyama, A. Economic models for the environmental Kuznets curve: A survey, J. Econ. Dyn. Control. 34 (2010) 1187-1201.

S. Paul, R.N. Bhattacharya, Causality between energy consumption and economic growth in India: a note on conflicting results, Energy Econ. 26 (2004) 977-983.

C.Y. Ho, K.W. Siu, A dynamic equilibrium of electricity consumption and GDP in Hong Kong: and empirical investigation, Energy Policy, 35 (2007) 2507-2513.

N. Bowden, J.E. Payne, Sectoral analysis of the causal relationship between renewable and non-renewable energy consumption and real output in the US. Energy Sources, Part B, Econo. Plann. Policy, 5 (2010) 400-408.

Shahbaz, M., Income inequality-economic growth and non-linearity: a case of Pakistan, Int. J. Soc. Econ. 37 (2010) 613-636.

A.V. Banerjee, A. F. Newman, Occupational Choice and the Process of Development. J. Polit.Econ. 101 (1993) 274-298.

H. Pesaran, Y. Shin, R. Smith, Bounds testing approaches to the analysis of level relationships, J. Appl. Econ. 16 (2001) 289-326.

P.K. Narayan, The saving and investment nexus for China: evidence from cointegration tests, Appl. Econ. 37 (2005) 1979-1990.

J. He, China's industrial SO2 emissions and its economic determinants: EKC's reduced vs. structural model and the role of international trade, Environ. Dev. Econ. 14 (2008) 227-262.

T. Song, T. Zheng, L. Tong, An empirical test of the environmental Kuznets curve in China: a panel cointegration approach, China Econ. Rev. 19 (2008), 381-392.

F. Halicioglu, An Econometric Study of CO2 Emissions, Energy Consumption, Income and Foreign Trade in Turkey, Energy Pol. 37 (2009) 1156-1164.

A. Tamazian, J. Piñeiro, K.C. Vadlamannati, Does Higher Economic and Financial Development Lead to Environmental Degradation: Evidence from BRIC Countries? Energy Policy 37 (2009) 246–253.

A. Jalil, M. Feridun, The impact of growth, energy and financial development on the environment in China: A cointegration analysis, Energy Econ. 33 (2011) 284-291.

A. Bannerjee, J. Dolado, R. Mestre, R., Error-correction Mechanism Tests for Cointegration in Single Equation Framework, J. Time Ser. Anal. 19 (1998) 267-283.

Y.G. Leow, A Reexamination of the Exports in Malaysia’s Economic Growth: After Asian Financial Crisis, 1970-2000, Int. J. Manag. Sci. 11 (2004) 79-204