Economic Growth and Environmental Pollution; Testing the EKC Hypothesis in Brazil

Abstract

The study looks at Economic growth and environmental pollution: an assessment of the Environmental Kuznets Curve in Brazil from 1990 to 2018. The ADF-Fisher, PP-Fisher, Im Pesaran, and Chin unit root tests checked stationarity. The VAR model was used to check the influence of individual endogenous variables, and the Wald test was used to determine the variables’ combined impact. The researchers used the Pairwise Dumitrescu Hurlin panel causality (PDHPC) and Pairwise Granger causality tests to assess all of the hypotheses. At order one, the variables are integrated. The lag order used for further calculations is the Akaike Information Criterion. The Fisher cointegration test revealed the cointegration according to the individual cross-section result. According to the Pairwise Dumitrescu Hurlin panel causality (PDHPC) and Pairwise Granger causality tests, economic growth and carbon dioxide emissions are bidirectional. Both the PDHPC and the PGCT support the environmental Kuznets curve theory. Because the EKC hypothesis exists in Brazil, the study concluded that both pure and filthy productions coincide. When Brazil reaches a particular level of development, however, its population may seek a healthier environment, and governments in these countries may pass stricter environmental regulations to encourage cleaner industry. When followed, the procedures may help to improve environmental quality.