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Bounds testing approach to analyze the existence of an environmental Kuznets curve in Ecuador

Abstract:

This paper provides empirical evidence of a long-run environmental Kuznets curve (EKC) for Ecuador from 1971 to 2011. Using the autoregressive distributed lag bounds testing approach, we do not just estimate the effect of economic growth on carbon dioxide emissions but also the effect of energy consumption on this one. The effects of all variables have the expected signs. In addition, we test for granger causality among the variables using an error correction model. Only gross domestic product granger causes energy consumption in the short-run. The results have several policy implications that are consistent with the recent environmental policy of the government.