Evaluating Globalization's Impact on Environmental Performance

As suggested by previous studies, panel estimation is more valid than time series and cross-section estimation, since it includes the two dimensions of time and individual which can improve the efficiency and offer more information about individuals’ dynamic progress, as well as solving the potential problems caused by missing variables (Wen et al., 2016; [1 (link)] Wang et al., 2021 [54 (link)]).
In line with Wen et al. (2016) [1 (link)], we also conduct empirical testing for the impact of globalization on environmental performance using system GMM estimation, which can control the lag term of EPI, meaning to include the dynamic progress of EPI, which is given below: $$EP{I}_{it}={\alpha }_{1}EP{I}_{i,t-1}+{\beta }_{1}Globa{l}_{it}+\beta ’X+u_i+u_t+{\epsilon }_{it},$$
where $$i=1,2,3\dots \mathrm{N}$$ is the dimension of individuals and $$t=1,2,3\dots T$$ is the time dimension. $$EPI$$ is the environmental performance, while $$EP{I}_{i,t-1}$$ is the first lag of it, to test the dynamic progress of environmental performance; $$Global$$ is the variable of globalization, and the other terms are similar to those in Equation (1). X represents the control variables, $$\beta$$ stands for the corresponding coefficient, $$u_i$$ and $$u_t$$ capture the individual and time fixed effects, respectively; $$i=1,2,3\dots \mathrm{N}$$ stand for the individual country; $$t=1,2,3\dots T$$ refers to the year; and $${\epsilon }_{it}$$ is the error term.