Environmental Kuznets Curve in Sweden - A regression analysis of the relationship between CO2 emissions and economic growth in Sweden during the years of 1960-2018

University essay from Göteborgs universitet/Institutionen för nationalekonomi med statistik

Abstract: The Environmental Kuznets Curve (EKC) is a theory suggesting the existence of an inverted U-shaped relationshipbetween emissions and economic growth. In today’s world of environmental awareness, it is an interesting topicsince it suggests that when economic growth reaches a certain point, pollution actually starts decreasing as economicwelfare increases. Thereby implying that it is possible to enhance the living standards for the population of bothdeveloping and developed countries, without causing environmental decay.This study aims to investigate whether the EKC theory holds true for CO2 emissions in the case of a countryat the very forefront of sustainability, namely Sweden. The method used in this investigation is a parametric regressionanalysis using quadratic, cubic, and quartic variables. Ultimately, the study finds evidence supporting theexistence of an inverted U-shaped EKC type relationship between CO2 emissions and GDP per capita in Swedenduring the years of 1960-2018. However, it is not clear if this finding is due solely to economic growth or whether it isa consequence of other interfering factors like policies, public opinion, technological advancements, sectorial changes,or historical economic trends.

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