The Energy-Environmental Kuznets Curve: Evidence from a Time-Varying Parametric Framework

Reconciling economic growth with environmental sustainability and energy security is a defining challenge for resource-constrained emerging economies. This study examines whether Jordan follows the Environmental Kuznets Curve (EKC) and the Energy Kuznets Curve (EnKC)—two hypotheses positing that as an economy grows, its environmental degradation and energy consumption follow an inverted U-shaped curve in relation to per capita GDP—as counterparts to the original Kuznets curve. While these relationships have been investigated in cross-country settings, little attention has been given to individual emerging economies such as Jordan, where energy and environmental issues are among the most pressing challenges of the new century. The existence of EKC and EnKC curves is tested using a “time-varying parametric (TVP) framework”—specifically, the unobserved components model (UCM), utilizing annual data from 1980 to 2024. Further tests are carried out to validate the nonlinearity hypothesis using the variable-addition test and non-nested model selection tests. Moreover, we augment the EKC and EnKC by incorporating trade openness and urbanization as control variables. For robustness, we support the UCM results with the Dynamic OLS (DOLS) long-run estimator. The results support the EnKC across the entire battery of tests, with a turning point of roughly USD 4000–4650 depending on specification. For the EKC, the OLS quadratic estimation does not exhibit a clear inverted-U; however, once a stochastic trend (UCM) or appropriate covariates (Trade, Urban) are introduced, the inverted-U re-emerges with a turning point near USD 4149–4874. This study contributes novel empirical evidence on the EKC and EnKC for Jordan using a TVP framework. Whereas prior studies have explored the EKC in Jordan, this study systematically validates both the energy and environmental variants of the Kuznets curve using robust econometric strategies. The results offer valuable policy insights for sustainable development in Jordan and other resource-constrained emerging economies facing analogous development–environment trade-offs within international climate transition frameworks.