An Investigating the Effect of Economic and Social Factors on Iran's Ecological Footprint Using the Markov Switching- Error Correction Model

Todays, environmental pollution is one of the main challenges of the world and global economic growth is causing environmental degradation. Therefore, considering the purpose of economic growth and its impact on ecological footprint, it is important to study the impact of economic and social factors on environmental pollution and its degradation in Iran, as well. This study investigated, the effects of the variable of economic growth, energy consumption, trade liberalization, financial development, human development and urbanization on environmental degradation over the period 1971-2015 in Iran using the Markov Switching – Error Correction model (MS-ECM). Based on the environmental Kuznets hypothesis was confirmed for the environmental degradation and its shape was found to be U-reversed. Economic growth, urbanization, energy use, financial development and urbanization were found to have a positive and significant effect on the environmental degradation, while the human development variable negatively influenced environmental degradation. Finally, practical recommendations are drawn from the results, for economic and environmental policies.