The impact of macroeconomic and financial development on carbon dioxide emissions in Pakistan: evidence with a novel dyn
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RESEARCH ARTICLE
The impact of macroeconomic and financial development on carbon dioxide emissions in Pakistan: evidence with a novel dynamic simulated ARDL approach Muhammad Imran Khan 1
&
Jian Zhou Teng 1 & Muhammad Kamran Khan 1
Received: 18 April 2020 / Accepted: 13 May 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This paper has empirically explored the impact of macroeconomic and financial development on CO2 emissions by utilizing a novel dynamic simulated ARDL model for annual time series data from 1982 to 2018 for Pakistan. The results of a novel dynamic simulated ARDL disclosed that the growth of stock market, FDI, economic growth, and consumption of oil wield a positive impact on CO2 emission, while domestic credit exerts a negative effect on CO2 emission both in the short and the long run in Pakistan. The stock market development and domestic credit wield a significant influence on carbon dioxide emission in Pakistan both in the long and the short run. FDI exerts significant impact only in the long run, while economic growth and consumption of oil wield significant impact only in the short run on CO2 emission in Pakistan. This study opens up new visions for the economy of Pakistan to sustain financial and economic growth by protecting environment from pollution through its efficient national environmental policy, fiscal policy, and monetary policy. Keywords CO2 . Stock market development . FDI . Economic growth . Oil consumption . Domestic credit . Dynamic simulated ARDL model
Introduction Environmental degradation is no more the concern of industrialized economies only, but is considered a disastrous problem across the globe. The overall increases in greenhouse gas emission have unhealthy impacts on all countries across the globe. Carbon dioxide is the major component of GHGs responsible for environmental degradation (Hamilton and Turton 2002). The burning of coal, oil, and natural gases is the most important cause of CO2 emission with deteriorating effects on the environment (Hossain 2011; Owusu and Asumadu-Sarkodie 2016; Sarkodie and Strezov 2018a, b). Environmental degradations are mainly caused due to high Responsible Editor: Nicholas Apergis * Muhammad Imran Khan [email protected] Jian Zhou Teng [email protected] 1
School of Economics and Management, Northeast Normal University, Changchun, Jilin, China
oil consumption, population explosion, deforestation, transportation, defective agriculture policies, gas from industries and autoemission, technocentrism, forest fire, and emission of greenhouse gases (see, for example, Khan et al. 2019a, b; Shahbaz and Sinha 2019; Shahbaz et al. 2012; Sadorsky 2010; Minier 2009; Dasgupta et al. 2006 and Dasgupta et al. 2001). Phenomena like forest fire and flooding are among the few major contributing factors that speed up environmental degradation in various parts of the world. These natural calamities disturb not only the infrastructure but also sometimes cause insuperable damage to agriculture, forest, natural res
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