The environmental Kuznetz Curve (EKC) hypothesis assumes an inverted-U- shaped relationship between different pollutants and per...

 

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The environmental Kuznetz Curve (EKC) hypothesis assumes an inverted-U- shaped relationship between different pollutants and per capita income, i.e., pollution increases up to a certain level as income goes up; after that, it de- creases. The idea behind the EKC hypothesis is that in the early stages of economic growth, degradation and pollution increase, but beyond some level of income per capita, the trend reverses, so that at high income levels economic growth leads to environmental improvement. (a) Propose a specification (population regression equation) to test this hypothesis. Use log (CO2 emissions) as the dependent variable (Y). You can add relevant independent variables, in addition to the variable of interest: a country's aggregate income per capita (X). Note that the level of analysis is country. (b) Based on your specification (regression equation), briefly describe how to test the hypothesis of inverse-U-shaped relationship between pollution and income per capita. The environmental Kuznetz Curve (EKC) hypothesis assumes an inverted-U- shaped relationship between different pollutants and per capita income, i.e., pollution increases up to a certain level as income goes up; after that, it de- creases. The idea behind the EKC hypothesis is that in the early stages of economic growth, degradation and pollution increase, but beyond some level of income per capita, the trend reverses, so that at high income levels economic growth leads to environmental improvement. (a) Propose a specification (population regression equation) to test this hypothesis. Use log (CO2 emissions) as the dependent variable (Y). You can add relevant independent variables, in addition to the variable of interest: a country's aggregate income per capita (X). Note that the level of analysis is country. (b) Based on your specification (regression equation), briefly describe how to test the hypothesis of inverse-U-shaped relationship between pollution and income per capita.

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a To test the hypothesis of an invertedUshaped relationship between pollution CO2 emissions and income per capita we can propose the following populat... View the full answer