Comparative re-estimation of environmental degradation and population density in China: Evidence from the Maki’s regime shift approach

Abstract

Numerous studies have estimated the linkage of economic growth and environmental degradation in the framework of EKC theory with typical CO2 emissions proxy. However, the complexity of environmental degradation (ED) is better measured by ecological footprint (ECF) in any geographical territory. Against this background, the present study is an effort to contribute to the existing literature by re-investigating the EKC hypothesis with ecological footprint and CO2 emissions proxy in the largest population of the world. Moreover, the role of population density is also considered with maximum data available from 1961 to 2016 for China. To estimate the said linkage, we apply first, second, and third-generation econometric approaches i. e. Augmented Dickey-Fuller unit root test, Zaviot Andrew’s unit root test with structural breaks, and Carrion-i-Silvestre’s general least-squares based test with several structural breaks. Likewise, the co-integration relationship is examined by applying Maki’s co-integration econometric approach with multiple structural breaks. Furthermore, the autoregressive distributive lag model is applied to investigate the long-run and short-run relationships by incorporating year dummies highlighted by MBk. The results report the U-shaped EKC for China, which means economic growth is helping to clean the environment while the population density (PD) is found to be a cause of increasing ED. Findings have robust policy implications for China.