Electricity consumption, urbanization, CO2 emission and economic growth for G7 countries under the Environmental Kuznets Curve: Panel cointegration and panel causality analysis

The aim of this study is to investigate the existence of the Environmental Kuznets Curve (EKC) hypothesis with the Panel DOLSMG estimator using series from the period 1971-2014 in the G7 countries (Germany, America, Great Britain, France, Italy, Japan and Canada). In addition, in the study, after determining the relationships between the variables of carbon dioxide (CO2) emission, economic growth, urbanization and electricity consumption by Gengenbach, Urbain and Westerlund panel cointegration analysis, it is aimed to determine the direction of the relationships with Dumitrescu and Hurlin panel causality analysis. The coefficients obtained from the long-term estimator for the variables that were found to be correlated as a result of the analyzes made within this framework support the existence of an inverted U-shaped relationship between economic growth and environmental pollution in G7 countries. In addition, it can be said that the increase in electricity consumption reduces the emission of CO2 emissions, and the increase in the rate of urbanization increases the emission of CO2 emissions. Finally, when the panel causality test to determine the direction of the relationships is examined, one-way causality from electricity consumption and economic growth to CO2 emissions; It has been determined that there is bidirectional causality between urbanization and CO2 emissions, electricity consumption and economic growth. With this study, it is aimed to contribute to the EKC literature with different sample selection in terms of country, period, variables and methods and to shed light on the policies to be implemented in order to prevent current or future environmental problems.