Testing the Environmental Kuznets Curve Hypothesis Using the Environmental Performance Index: Evidence from Ten Largest High-Income OECD Economies (2006–2022)
DOI:
https://doi.org/10.32662/golder.v9i2.5242Keywords:
Environmental Kuznets Curve, Renewable Energy, Non-Renewable Energy, P-VECMAbstract
This study aims to analyze the influence of economic growth, renewable energy consumption, and non-renewable energy consumption on the Environmental Performance Index (EPI), as well as to test the Environmental Kuznets Curve (EKC) hypothesis in the 10 largest OECD countries for the period 2006-2022. Using the Panel Vector Error Correction Model (PVECM) analysis technique with the Common Effect Model (CEM) approach, this study provides results that the EKC hypothesis in the 10 countries with the highest economic growth rates in the OECD is not proven. Although GDPPC² is proven to have a positive and significant effect which means indicating a turning point, per capita income and non-renewable energy consumption are proven to have a negative and significant effect both in the short and long term. This indicates that increasing per capita income will actually cause a decline in environmental quality in both the short and long term. This has the impact of policies that sustainable economic growth will be realized if the government pays attention to environmental aspects such as implementing policies prohibiting the use of fossil fuels, imposing carbon taxes to reduce carbon emissions and providing incentives for investment in infrastructure development using renewable energy such as solar or wind energy.
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