A Statistical Analysis of the Environmental Kuznets Curve: Investigating the Relationship Between Economic Growth and Pollution In China

Abstract

The purpose of this paper is to present statistical analysis of the Environmental Kuznets Curve (EKC) theory, the hypothesized relationship between different environmental indicators, by analyzing empirical studies from existing literature. This paper describes the critical history and theory of the EKC, its theoretical foundations, and possible deviations with the focus on utilizing the Simultaneous Equation Model (SEM). The Kuznets Curve proposes that as an economy develops, the inequality will increase as the income per capita increases; however, it will then decrease and display an inverted U-shaped pattern. The goal is to assess if EKC aligns with the imperial analysis in the case of the Chinese economy as China has experienced the fastest economic growth over the past decade.