Analysis of the Relationship Between Real Production and Environmental Pollution: Panel Quantile Regression Approach

Abstract

Today, the damage caused by the production process to the environment has led to the development of the literature with the Kuznest, pollution haven hypotheses within the framework of sustainability. From this point of view, the optimum balance and efficiency production process has been reconsidered with the studies that take into account the impact of the economic activity process on the environment. Empirical studies have been conducted on the negative impact of environment and climate change on the output-input relationship. In this context, this study analyzes carbon emissions, industrial production index representing real production and the share of renewable energy in total energy using panel quantile approach. For this purpose, data for 37 selected countries are used, using annual data for the period 2000-2019. The purpose of using this approach is to provide a more comprehensive estimation of how carbon emissions, industrial production index and the share of renewable energy in total energy differ across percentiles. Considering the findings obtained from the estimation, the relationship between carbon emissions and industrial production index and the share of renewable energy in total energy is statistically significant and the coefficient value changes for different quantile values at 95% confidence interval. This means that the industrial production index and the share of renewable energy in total energy have different effects on carbon emissions and that these effects are heterogeneous.