Is There an Environmental Kuznets Curve for Bangladesh? Evidence from ARDL Bounds Testing Approach

Faridul Islam (), Muhammad Shahbaz and Muhammad Sabihuddin Butt
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Muhammad Sabihuddin Butt: Pakistan, and Applied Economic Research Centre, Karachi University, Pakistan.

Bangladesh Development Studies, 2013, vol. 36, issue 4, 1-23

Abstract: The environmental Kuznets curve (EKC) hypothesis posits that in the early stages of economic growth environmental degradation and pollution increase. However, as a country reaches a certain level of income, the trend reverses postulating a relationship that produces an inverted U-shaped curve. Bangladesh has been recording remarkable rates of economic growth which, along with other factors, has raised the specter of a looming environmental crisis. This paper empirically investigates the EKC hypothesis for Bangladesh using data from 1971 to 2010 applying the Autoregressive distributed lag (ARDL) approach to cointegration for a long run relation and the Granger causality within the vector error correction model for the short run dynamics. The results show that energy consumption is a major contributor to CO2 emissions; trade openness lowers CO2 emissions, but urbanisation worsens it. Economic growth, energy consumption, trade, and urbanisation Granger cause CO2 emissions.

Keywords: EKC; ARDL; VECM; Bangladesh (search for similar items in EconPapers)
JEL-codes: O13 Q25 Q53 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (15)

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