Can public debt mitigate environmental debt? Theory and empirical evidence

Boly, Mohamed; Combes, Jean-Louis; Menuet, Maxime; Minea, Alexandru; Motel, Pascale Combes; Villieu, Patrick

doi:10.1016/j.eneco.2022.105895

Cited by 16 publications

(11 citation statements)

References 35 publications

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“…Opinions are divided regarding the effect of government debt on carbon dioxide emissions. When the government incurs debt for research and development of low carbon technology, Boly et al (2019) argues that it can translate into a quality environment. However, government debt may put stress on the environment due to the need to increase output for debt settlement.…”

Section: Review On Debt-carbon Emission Nexus and Hypothesis Developmentmentioning

confidence: 99%

“…The results paint the picture that a lower level of debt enables the government to deal with environmental issues. It could be that the government is able to channel resources from loans to support advanced technology to help address environmental challenges (Boly et al, 2019). However as the debt increases and there is the need to settle the debt, attention shifts from allocating resources into environmentally friendly ventures to non-environmentally friendly ventures.…”

Section: Meq 343mentioning

confidence: 99%

“…The conclusion from many of these studies also suggests the need to empirically pay attention to other variables that have not been considered in the literature. It is therefore not surprising that the effect of natural resources and debt is gaining the attention of researchers in recent times (Atif et al, 2022;Boly et al, 2019;Zhao and Liu, 2022;Oludimu and Alola, 2022). Ghana, like many developing countries, has committed to addressing climate change by lowering the rate of carbon dioxide emissions.…”

Section: Introductionmentioning

confidence: 99%

“…Nevertheless, the environmental impact of this MEQ 34,3 has not been addressed yet. According to Boly et al (2019) government debt may promote a quality environment through investment and research works in the area of low carbon technologies. However, government debt may put stress on the environment due to the need to increase output for debt settlement.…”

Section: Introductionmentioning

confidence: 99%

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The effect of natural resources extraction and public debt on environmental sustainability

Alhassan

Kwakwa

2022

MEQ

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PurposeThe rise in public debt and the increased extraction of natural resources in Ghana at a time that environmental degradation is escalating, especially with carbon dioxide emission, is worrying. This seems to cast doubt on the country's ability to meet the goals of the Paris agreement for climate change and ensuring sustainable development. Consequently, in this study, the effect of natural resources extraction and government debt on carbon dioxide emission is investigated.Design/methodology/approachThe Environmental Kuznets Curve (EKC) hypothesis was adopted for this study. The Fully Modified Ordinary Least Square Model was used for assessing the data. An annual data from 1971 to 2018 was used for the analysis.FindingsThe long-run results based on the Fully Modified Ordinary Least Square analysis reveal that natural resources extraction increases carbon dioxide emissions. Moreover, the joint effect of post-oil production in commercial quantities and natural resources rent increases carbon dioxide emission. Further, the findings document that the initial stage of government debt improves environmental quality up to a point, beyond which an increase in debt hurts the environment. On the environmental degrading effect of economic growth, the findings validate the Environmental Kuznets Curve hypothesis. It is also observed that urbanization degrades environmental quality.Practical implicationsThe study offers appropriate recommendations policymakers need to embrace towards the attainment of lower carbon emissions from the loans and natural resources rent to achieve environmental sustainability.Originality/valueThe effect of debt on carbon dioxide emission is assessed for the Ghanaian economy. It also contributes to studies on the natural resources-carbon emission nexus.

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Section: Review On Debt-carbon Emission Nexus and Hypothesis Developmentmentioning

confidence: 99%

Section: Meq 343mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The effect of natural resources extraction and public debt on environmental sustainability

Alhassan

Kwakwa

2022

MEQ

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“…Brock and Taylor (2010) model the same trade-off by removing abatement costs from the income available for consumption and investment elsewhere. More recently, Boly et al (2022) describe an endogenous growth model where public debt is used to fund pollution abatement. Underlying this model is the premise that pollution abatement is a drag on economic activity and a drain on resources.…”

Section: Reconsidering the Gdp And Environmentmentioning

confidence: 99%

Economic Growth Theory and Natural Resource Constraints: A Stocktake and Critical Assessment

Maris¹,

Holmes²

2023

Australian Economic Review

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Society is facing significant environmental challenges. The effects of climate change, biodiversity loss and environmental degradation are being increasingly felt worldwide. In recent years, researchers have attempted to adapt neoclassical and endogenous growth theory to account for constraints imposed by scarce natural resources. In this article, we review where, and how, researchers tend to incorporate natural resources and natural capital into growth theory. We then outline areas and questions that remain unanswered, including how novel impact investing and the eroding trade-off between GDP and the environment affect growth theory.

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Environmental quality along the process of economic growth: a theoretical reappraisal

Menuet,

Minea,

Villieu

et al. 2023

Econ Theory

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Can public debt mitigate environmental debt? Theory and empirical evidence

Cited by 16 publications

References 35 publications

The effect of natural resources extraction and public debt on environmental sustainability

The effect of natural resources extraction and public debt on environmental sustainability

Economic Growth Theory and Natural Resource Constraints: A Stocktake and Critical Assessment

Environmental quality along the process of economic growth: a theoretical reappraisal

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