Examining the asymmetric effects of fiscal policy instruments on environmental quality in Asian economies
- PDF / 1,515,821 Bytes
- 13 Pages / 595.276 x 790.866 pts Page_size
- 52 Downloads / 193 Views
RESEARCH ARTICLE
Examining the asymmetric effects of fiscal policy instruments on environmental quality in Asian economies Sana Ullah 1
&
Muhammad Tariq Majeed 1 & Muhammad Zubair Chishti 1
Received: 1 May 2020 / Accepted: 22 June 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Empirical studies pertaining to the effects of fiscal policy instruments on environmental quality have provided mixed evidence. We consider the asymmetric effects of fiscal policy instruments on environmental quality for the top ten Asian carbon emitters over the period 1981–2018. We go beyond the literature and claim that the effects could be asymmetric. More specifically, we found that a positive shock in government expenditure will worsen environmental quality in Malaysia, UAE, Thailand, Indonesia, Turkey, Iran, India, and China, and improve it in Japan. On the other hand, we found that cutting government expenditure will improve environmental quality in these economies and will worsen only in Japan. Moreover, a higher government income tax revenue uniquely increases the government’s spending that increases the carbon emissions in Malaysia, UAE, Thailand, Indonesia, Turkey, Iran, India, and China, and decrease in Japan. The negative shock of government revenue has adverse results on carbon emissions in these economies. However, short-run asymmetric effects translate to long-run effects in most Asian economies. Keywords Fiscal policy . Environmental pollution . Asymmetric ARDL . Asia economies
Introduction The dynamic relationships between environmental quality, energy use, and economic growth have attracted substantial attention from scholars during the last few decades. The tradeoff between environmental quality and economic growth is a global dilemma. Since the beginning of the industrial revolution from about 1760s, global economic growth has increased substantially at the cost of environmental degradation. The basic reason behind environmental loss is the use of conventional energy sources such as coal and fossil fuels in the production processes. Therefore, economic growth, Responsible editor: Nicholas Apergis * Sana Ullah [email protected] Muhammad Tariq Majeed [email protected] Muhammad Zubair Chishti [email protected] 1
School of Economics, Quaid-i-Azam University, Islamabad, Pakistan
energy use, and environmental degradation show an amalgamation of triumvirate complicated structures— trilemma. The relationship of fiscal instruments with environmental quality has attracted the attention of the environmental and energy economists in recent years. The studies, however, are fairly limited in the existing empirical literature. The fiscal role for environmental quality can be both amplifying and mitigating CO2 emissions. Few studies have considered government spending as a fiscal instrument to control the environmental quality (Frederik and Lundström 2001; Bernauer and Koubi 2006; López et al., 2011; Halkos and Paizanos 2013, 2016). López et al. (2011) suggested four channels through which fis
Data Loading...
