Dynamic Impact of Income Inequality on Carbon Dioxide Emissions in Malaysia: New Evidence from ARDL Bounds Testing Approach

This paper investigates the impact of income inequality on CO2 emissions in Malaysia. It also tests the environmental Kuznets curve (EKC), covering the period from 1989 to 2023. The Error Correction Model (ECM) and Autoregressive Distributed Lag (ARDL) bounds testing techniques are used in the study to evaluate the short- and long-term relationships between variables. The empirical results obtained from the analysis support the EKC hypothesis. Besides, the results indicate that income inequality and other control variables such as, energy consumption, and industrialization have a positive relationship with carbon dioxide, while urbanization has an insignificant negative connection with CO2 emissions. The findings are reliable, consistent, and robust as they are tested using several stability and diagnostic procedures. The study's conclusions may significantly impact Malaysia's ability to implement appropriate policies to cut CO2 emissions.