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For the first time, this study introduces-proposes using the Armey curve hypothesis (ACH) for testing the environmental Kuznets curve hypothesis (EKCH) in the relevant literature. The rationale for this new proposed methodology is that both hypotheses are expected to have similar inverted U-shaped curves. Hence, we combine the aforementioned hypotheses to obtain a single composite model. This single model may allow us to calculate a maximum (optimum) level of government expenditures that will increase or decrease CO2 emissions for USMCA (the USA-Mexico-Canada Agreement) countries. To this end, our study employs an augmented mean group (AMG) estimator. The results demonstrate that the EKCH is verified by way of the AC model only for Mexico. Additionally, with the advantage of this approach, we calculated the optimal government spending level, which will increase both per capita real GDP (RGDPPC) and CO2 emissions in this country by around 26.4% of RGDPPC. This level of spending will be a kind of threshold point for the Mexican government's policymakers. Hence, they will know that if they continue to spend more than this level, both the RGDPPC and CO2 emissions will decrease, implying either a lower RGDPPC or a cleaner environment. The primary purpose of the proposed methodology in this study is to reveal the possible effects of the government's economic growth-oriented increased public expenditures on the environment in a single composite model. In other words, the relationship between economic growth and the environment is approached from the perspective of public spending, and it is reminded that governments should have harmonious and sustainable public spending policies for both economic growth and a cleaner environment. [ABSTRACT FROM AUTHOR]

We investigate the validity of the environmental Kuznets curve (EKC) hypothesis for the NAFTA countries. In this investigation, we approach this hypothesis from a different methodology and propose employing the ARMEY curve hypothesis since the mathematical-functional propositions of both hypotheses were constructed on the same inverted U-shaped relationships. Thus, for the first time, it can be interpreted that the EKC hypothesis is empirically tested through a transmission mechanism of the ARMEY curve hypothesis in a single composite model. Therefore, this approach makes our study different from all empirical studies in the relevant literature. We apply the Augmented Mean Group (AMG) estimator to this aim. Empirical findings indicate that the ARMEY curve hypothesis was verified only for the USA. However, this new approach proposed in this study cannot test the EKC hypothesis through the ARMEY curve model for any NAFTA country since this approach requires verification of the ARMEY curve hypothesis and a significant composite model for the same NAFTA country. If our composite model was significant, it might make it possible to numerically determine a maximum real GDP per capita level that would minimize or maximize CO2 emission levels for the USA. Therefore, this study introduces-proposes this new methodology as an alternative way of testing the EKC hypothesis in the relevant literature for future empirical studies. [ABSTRACT FROM AUTHOR]