Is There An Environmental Kuznets Curve in MENAP Countries? Quadratic and Cubic Polynomial Random Coefficient Panel Regression Model

Abstract

 Abstract— The paper aims to study the relationship between economic growth and CO 2 emissions in MENAP countries over the period 1994 to 2011. Breusch-Pagan LM cross-sectional dependency test, CADF panel unit-root test and Westerlund panel cointegration test have been used for the estimation. Quadratic and cubic polynomial random coefficient panel regression models (RCM) were estimated using carbon emission, economic growth and energy consumption variables. Quadratic and cubic RCM models were estimated for two sub-sample individual countries, oil-exported MENAP countries and others MENAP countries. As a result of panel unit-root test, all variables are stationary in first difference. Panel cointegration test represented that there is a long term relation among carbon emission, economic growth and energy consumption variables. In oil-exported MENAP countries, quadratic random coefficient panel regression model results proved that there is U-shaped and monotonically increasing shape, cubic random coefficient panel regression model showed that there is monotonically decreasing and N-shaped. In others MENAP countries, quadratic random coefficient panel regression model results proved that there is an inverted U-shaped, cubic random coefficient panel regression model showed that there is N-shaped. Consequently, Environmental Kuznets Curve (EKC), inverted U-shape, is valid only other MENAP countries, excluding Morocco, at the quadratic model. And, EKC reformed N-shaped in cubic model in the same