Revisiting the environmental Kuznets curve in China: A spatial dynamic panel data approach

With rapid economic growth, air pollution is becoming an important issue in China. This paper investigatesthe relationship between air pollution and economic growth using an augmented green Solow model. Usingthe prefecture-level data of 284 cities in China during the period from 2004 through 2015, we investigate theenvironmental Kuznets curve (EKC) using spatial dynamic panel data models. Our model suggests an invertedU-shaped EKC, and the peak will come earlier due to the spillover effect of abatement technology. The shapeof the EKC is supported by empirical evidence and is robust when we group cities by income level, region, andsecondary industry. We also show that the shape of the EKC is sensitive to the model specification of dynamicand spatial features.