Abstract
The paper emplyos the Pooled Mean Group (PMG) estimation to investigate empirically the relationship among carbon dioxide (CO2) emissions and potential determinants for a panel of 18 MENA countries during the period 1980-2018. The good properties in terms of consistency and efficiency of the coefficient estimates make the PMG approach very useful for examining the determinants of pollution emissions in the framework of dynamic heterogeneous panel data models over both the long- and short-run. Unlike the extant literature on MENA economies, many determinants are included in the analysis to avoid the bias problem of omitted variables. Three energy sources and two classes of sub-panels according to regional proximities and oil wealth are considered in order to provide a sensitivity check on the findings and to make the analysis more homogeneous. The results reveal long-run relationships between pollution emissions and the selected variables. All determinants are found to be statistically significant for all panels and energy sources over the short-run. However, some variables are not significant determinants over the long-run. The Environment Kuznet's Curve (EKC) hypothesis is supported only for the panel of non-oil countries, which has meaningful implications and reveals the importance of splitting the global panel in order to appropriately examine the EKC hypothesis and conduct policy debates according to the findings of each panel. The obtained results provide important policy implications.
Highlights
The linkages between emissions of various pollutants and potential determinants become one of the most studied topics in the ecological economics literature during the past few decades with the improvement of econometric methods
ΔCO2,it and ΔXit are respectively the first differenced carbon dioxide emissions and the set of related determinants, ei,t−1 is the oneperiod lagged error correction obtained from the estimation of the cointegrating relationship,4 and vit is the disturbance term with different variances across countries
The error correction term coefficient μi measures the adjustment speed of the short-run deviations of the carbon dioxide emissions towards the long-run equilibrium state, the set of coefficients β show the short-run past own impacts of CO2 emissions, the vectors of coefficients δ and γ measure the short-run effects of the considered determinants on pollution emissions, and ai and bi are individual specific effects
Summary
The linkages between emissions of various pollutants and potential determinants become one of the most studied topics in the ecological economics literature during the past few decades with the improvement of econometric methods. Most of the conducted empirical works focus on testing the validity of the EKC hypothesis at country and/or panel levels (see Dinda and Coondoo, 2002; 2006; Akbostancı et al, 2009; Lee and Lee, 2009; Fodha and Zaghdoud, 2010; Narayan and Narayan, 2010; Jaunky, 2011; Arouri et al, 2012; among others). Such hypothesis expresses the relationship between economic activity and pollution emissions (proxy of environmental quality according to Soytas et al (2007)). As the economy develops over time, there is improvement in the environmental quality
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