Renewable Energy Consumption, Multifactor Productivity, Research and Development Expenditure, Urbanization, and Ecological Footprint in G7 Countries : Testing the Environmental Kuznets Curve Hypothesis with Panel Cointegration

In this study, the relationship between renewable energy consumption, multifactor productivity, research and development (R&D) expenditure, urbanization, and ecological footprint was investigated under the environmental Kuznets curve (EKC) hypothesis between 1991 and 2016, using Lagrange multiplier (LM) bootstrap panel cointegration and augmented mean group (AMG) estimators for G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States). The LM bootstrap panel cointegration test results demonstrate that series in the EKC model are related in the long run, and the AMG long-run coefficient estimates show that the EKC hypothesis is not valid. The results that are statistically significant in the EKC model for the various countries are as follows: i) Productivity appears to reduce environmental pollution in France, Germany, Italy, and the United States. ii) R&D expenditure reduces environmental pollution in Canada, Germany, Japan, the United States, and the whole panel. iii) In the United States, renewable energy reduces environmental pollution. iv) Urbanization increases environmental pollution in Italy, but urbanization expenditure reduces environmental pollution in Japan. An overall evaluation of the results reveals that adopting policies that aim to increase productivity and R&D expenditure in G7 countries will have a positive effect on the environment