Based on the Environmental Kuznets Curve (EKC) hypothesis, this study investigates whether there is a revised EKC relationship between economic growth and CO2 emissions under the presence of renewable energy and trade for a panel of 35 countries whose trade openness index have remained higher than average global trade index over the period 1980-2012. By addressing similar trade characteristics rather than income levels, this paper applies a panel analysis with random effects and fixed effects to test EKC hypothesis. We use the principal component analysis to explain why CO2 emissions stands as a critical indicator of environmental quality. The results from our random-effects and country-fixed effects models, including the impacts of trade and renewables, reveal evidence of the revised EKC hypothesis within our sample. Trade is found to have a positive association with the level of CO2 emissions, while renewable energy has a negative relationship with CO2 levels. As a policy implication, countries should strengthen environmental regulations of trade agreements and encourage investment in renewables to combat climate change.
Nguyen Thi Ngoc Lan, "The Role of Trade and Renewables in the Nexus of Economic Growth and Environmental Degradation: Revisiting the Environmental Kuznets Curve (EKC)" (2017). Undergraduate Research Awards. 34.