Reexamining the EKC Hypothesis in a Islamic Country: Evidence from Threshold Regression

This paper studies the existence of EKC theory in a Islamic country i.e. Islamic Republic of Pakistan in a nonlinear framework, by implementing novel endogenous threshold autoregressive (TAR) models for approximation and interpretation. The role of GDP per capita, energy consumption per capita, ratio of exports and imports to GDP(%) and net ODA received (% of GNI) in influencing the ecological footprint of production and consumption of Pakistan is analyzed in the context of EKC theory for the period 1965 to 2017. The research determine the nonlinear effects in the association among Economic growth and Ecological footprint from both production and consumption based approach. The results of estimated production and consumption based threshold regression model (TAR) indicate 713.65 USD as the threshold per capita income. The paper also established Pakistan has come to a turning point in the year 1988 and pursued by a diminishing pattern in environmental deterioration. In addition, the empirical findings confirm the presence of EKC theory in Pakistan.