Abstract
This study explores the determinants of ecological footprint by integrating the influence of the shadow economy. The findings based on the panel quantile regression indicate that the environmental effects of the shadow economy, trade openness, energy intensity, renewable energy, and income are not homogeneous across various levels of ecological footprint. The shadow economy-ecological footprint nexus follows an inverted U-shaped pattern. Initially, the higher size of the informal economy leads to more ecosystem degradation. When the shadow economy increases to certain thresholds, its environmental impact reverts to benefit. Such threshold changes with the evolution of ecological footprint. Specifically, it first rises then decreases along with the degradation of the ecosystem. Moreover, the heterogeneous panel causality test reports the one-way directional running from the shadow economy to the ecological footprint in OECD countries. The significant and heterogeneous relationships between ecological footprint and its determining factors are also established.
The Shadow Economy-Environmental Quality Nexus In OECD Countries: Empirical Evidence From Panel Quantile Regression
