Impact of Time Trend and Heterogeneity on EKC in Asian Countries

Abstract

The basic objective of the study is to investigate the shape of EKC for 39 Asian countries and income groups during the period of 1990-2015 with and without the use of a linear time trend variable. The study tests the validity condition of the mathematical model depicting an ‘N’ shaped EKC. Besides, the status of each country group is compared as per the expected emissions of GHG. The empirical investigation reveals that for both the overall and the high-income Asian group, the presence of a linear time trend variable renders EKC to be inverted U-shaped. However, eliminating the effect of time, the EKC becomes an ‘N’ shaped curve in agreement with a valid mathematical model. The middle-income Asian countries follow a monotonic increasing EKC relationship both in the presence and absence of a linear time trend. The computation of expected emissions of GHG demonstrates that the lower-middle-income group is expected to emit more among the three income groups followed by the high-income group and the upper-middle-income group.