Revising environmental Kuznets curve in Russian regions: role of environmental policy stringency

Abstract

This paper measures the effects on carbon emissions of production scale, composition, technological use, and environmental policy to elucidate the environmental Kuznets curve (EKC) hypothesis, synthesising the propositions of Grossman and Krueger, Q J Econ, 110(2), 353–377 (1995) and Brock and Taylor (2005) for the case of seventy-seven regions of the Russian Federation from 1999 to 2015. To this end, we apply dynamic threshold regression due to its robustness in addressing non-linear asymmetry and unobserved individual heterogeneity issues. Our empirical investigation demonstrates that the gross regional products (GRP) per capita play a threshold role in supporting the EKC hypothesis and non-monotonic scale effect. Modern technologies used in production appear to be the driving factor in explaining the declining portion of EKC and corroborating the technology effect proposition. Our finding also affirms the effect of composition, as the impacts of energy and technology vary with regional economic growth orientations (e.g. among manufacturing, agricultural, mining, and trade zones). Environmental policy stringency is found to be effective in curbing regional carbon emissions. We provide several policy implications based on the results.