ABSTRACT
This chapter aims to contribute to the development of environmental Kuznets curve (EKC) research, which is not fully surveyed, given that the literature has overwhelmingly increased over the past years, in two main directions. First, we use modern econometric panel approaches capable of providing new evidence on EKC long-run dynamics. We employ recent homogeneous estimators – as those derived from panel cointegration analysis or those that explicitly take into account cross-section correlation – as well as heterogeneous estimators which allow individual slopes to be derived from sampling or Bayesian approaches. It is difficult a priori to decide between homogeneous and heterogeneous panel estimators. On the one hand, the increasing time dimension means that the slope homogeneity implicit in the use of a pooled estimator is questionable. On the other hand, most researchers agree about the use of homogeneous estimators since the efficiency gains from pooling often overcome their costs (Baltagi et al. 2000, 2002, 2004). Some researchers have suggested using intermediate estimators as Bayesian shrinkage estimators (Maddala et al. 1997) or the pooled mean group (PMG) estimator (Pesaran et al. 1999), allowing intercepts, short-run coefficients and error variances to differ freely across cross-sections, while longrun coefficients are held constant.
