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

Abstract

The Environmental Kuznets Curve (EKC) is a theory suggesting the existence of an inverted U-shaped relationship between emissions and economic growth. In today’s world of environmental awareness, it is an interesting topic since it suggests that when economic growth reaches a certain point, pollution actually starts decreasing as economic welfare increases. Thereby implying that it is possible to enhance the living standards for the population of both developing 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 country at the very forefront of sustainability, namely Sweden. The method used in this investigation is a parametric regression analysis using quadratic, cubic, and quartic variables. Ultimately, the study finds evidence supporting the existence of an inverted U-shaped EKC type relationship between CO2 emissions and GDP per capita in Sweden during the years of 1960-2018. However, it is not clear if this finding is due solely to economic growth or whether it is a consequence of other interfering factors like policies, public opinion, technological advancements, sectorial changes, or historical economic trends.