Exploring the link between environmental pollution and economic growth in EU-28 countries: Is there an environmental Kuznets curve?

Abstract

This study examines the Environmental Kuznets Curve hypothesis (EKC), considering the primary energy consumption among other country-specific variables, for a panel of the EU-28 countries during the period 1990-2014. By estimating pooled OLS regressions with Driscoll-Kraay standard errors in order to account for cross-sectional dependence, the results confirm the EKC hypothesis in the case of emissions of sulfur oxides and emissions of non-methane volatile organic compounds. In addition to pooled estimations, the output of fixed-effects regressions with Driscoll-Kraay standard errors support the EKC hypothesis for greenhouse gas emissions, greenhouse gas emissions intensity of energy consumption, emissions of nitrogen oxides, emissions of non-methane volatile organic compounds and emissions of ammonia. Additionally, the empirical findings from panel vector error correction model reveal a short-run unidirectional causality from GDP per capita growth to greenhouse gas emissions, as well as a bidirectional causal link between primary energy consumption and greenhouse gas emissions. Furthermore, since there occurred no causal link between economic growth and primary energy consumption, the neo-classical view was confirmed, namely the neutrality hypothesis.