Validity of Environmental Kuznets Curve in the Malaysian Economy: A Fresh Evidence

Authors

  • Saeed Ur Rahman Department of Economics, Ghazi University, Dera Ghazi Khan, Pakistan
  • Zia Ur Rahman Department of Economics, Ghazi University, Dera Ghazi Khan, Pakistan
  • Maryam Ibrahim Department of Economics, Ghazi University, Dera Ghazi Khan, Pakistan

DOI:

https://doi.org/10.52223/jei4032214

Keywords:

Environment Kuznets Curve, Globalization, Energy consumption, Fiscal development, Malaysia

Abstract

It is acknowledged that environmental degradation, climate change and the atmosphere's temperature are increasing due to the emission of greenhouse gasses. Therefore, a speedy response is required to lessen the severe effects of greenhouse gases. The present study has analyzed the influence of electric consumption, fiscal development, globalization, and trade openness on carbon emission using the latest dataset and modern econometric techniques. To accomplish the said objectives, the study has employed Johansen cointegration, autoregressive distributed lag model (ARDK), and block exogeneity. The results specify that with the 1% increase in electric consumption, fiscal development, globalization and trade openness, the carbon dioxide emission increases by 0.01%, 0.04%, 0.68%, and 0.25%, respectively. Moreover, the results also indicated that the environmental Kuznets curve is prevailing in the Malaysian economy because an inverted U-shape connection occurs between carbon and GDP2. On the basis of data diagnostics, it is determined that the ARDL model is credible, stable, and reliable. Further, block exogeneity affirms the long-term affiliation among the factors and concludes that all the factors under analysis contribute to the environmental deterioration in the Malaysian economy. Therefore, the government may design an environmental or pollution tax policy to minimize carbon emissions.  Green energy should be produced and consumed as it is environmental friendly and helps to reduce temperature and atmospheric pollution.

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Published

2022-12-30

How to Cite

Rahman, S. U. ., Rahman, Z. U. and Ibrahim, M. (2022) “Validity of Environmental Kuznets Curve in the Malaysian Economy: A Fresh Evidence”, Journal of Economic Impact, 4(3), pp. 278–288. doi: 10.52223/jei4032214.

Issue

Section

Research Articles