Exploring the dynamic effects of shocks in monetary and fiscal policies on the environment of developing economies: evidence from the CS-ARDL approach

Noureen, Shaista; Iqbal, Javed; Chishti, Muhammad Zubair

doi:10.1007/s11356-022-19095-0

Cited by 30 publications

(28 citation statements)

References 80 publications

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“…As elucidated above, CO 2 emissions are immediately affected by each country's fiscal policy [30,31,37]. Furthermore, foreign direct investments (FDIs) are discussed as a determinant of CO 2 and GHG emissions [49] and energy consumption [63], despite the fact that they also influence fiscal policy and economic development [64].…”

Section: Methodsmentioning

confidence: 99%

“…Moreover, both studies show that the findings are robust in the long term. Noureen et al [31] demonstrated that fiscal policy significantly impacts emissions, confirming that expansionary fiscal policy is a deteriorating factor of environmental quality. At the same time, the usage of renewable energy is expected to increase GDP growth, while lowering CO 2 , CH 4 , and N 2 O emissions.…”

Section: Literature Reviewmentioning

confidence: 97%

“…Although the existing literature points out that fiscal policy and institutional quality directly impact CO 2 emissions, so far, little research has been conducted investigating the simultaneous effect of these determinants. Furthermore, Noureen et al [31] have pointed out that fiscal policy affects the three basic substances included in GHG emissions (namely, carbon dioxide, methane, and nitrous oxide), though no research so far has been conducted on the effect of fiscal policy and institutional quality on GHG emissions. We aim to fill this gap with the present research.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In this context, Noureen et al [31] prove that monetary policy directly impacts emissions in developing countries, similar to fiscal policy. More specifically, a deteriorating factor of environmental quality is an expansionary monetary policy (i.e., decreasing the interest rate).…”

Section: Monetary Policy and Emissions Nexusmentioning

confidence: 99%

“…Central banks also directly impact GHG and CO 2 emissions, as they are enhanced by a loose monetary policy [29]. Furthermore, they have an indirect impact on emissions as monetary policy targets; the GDP growth has a positive correlation with emissions [30,31].…”

Section: Introductionmentioning

confidence: 99%

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Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

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Environmental control remains a salient aspect of states’ policies in the present decade. To reduce emissions, governments and central banks tend to adopt various strategies. The present research quantifies the nexus between fiscal and monetary policy, institutions’ quality, central bank characteristics, and carbon dioxide and greenhouse gas emissions. Data has been sourced from 95 countries during the period from 1998 to 2019. According to the empirical results, the main determinants of gas emissions in developing countries are economic growth, government expenses, and central bank independence, whereas, in developed countries, they are economic growth, government efficiency, and central bank transparency and independence. Economic growth is a significant deteriorating factor in the state of the environment. By contrast, institutional and bureaucratic quality, measured through government effectiveness and expansionary fiscal policies as well as central bank independence and transparency, are ameliorating factors, as they decrease emissions. To conclude, governments must first reduce control over central banks and target government spending on the energy transition.

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Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 97%

Section: Literature Reviewmentioning

confidence: 99%

Section: Monetary Policy and Emissions Nexusmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Impact of Monetary Policy on Climate Change: A Systematic Literature Review and Future Research Recommendations

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Local environmental legislation and employment growth: evidence from Chinese manufacturing firms

Wen

Bian

2023

Environ Dev Sustain

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In China, there exists a huge debate for a long time on whether a double dividend, reducing pollution emissions and boosting employment, can be achieved by intensifying environmental regulations. In this paper, we use two data sets on provincial environmental legislation and Chinese manufacturing firms during 1998–2013, to estimate the impact of provincial environmental legislation on the firms’ employment growth with a difference-in-difference (DID) model. Results showed that (1) after the implementation of environmental legislation, the employment growth of regulated manufacturing firms decreases significantly by 3.07%, and this result is robust to alternative tests. (2) Local environmental legislation reduces employment growth mainly via the influencing mechanism of the firm’s entry and exit, export, and innovation. (3) The local environmental legislation has heterogeneous impacts on employment growth in different industries and different regions, and the estimated effect is more obvious in high-pollution industries and areas with strong enforcement. (4) Environmental legislation significantly improves job destruction and reduces job creation, resulting in a − 3.86% job net increase. Due to the long-term implementation of extensive economic growth mode, China’s ecological environment has been deteriorating since the 1990s, and environmental pollution has attracted more and more social attention. Until 2013, the Communist Party of China put forward 'ecological civilization', and building a beautiful new China with harmonious coexistence between man and nature has become an important development strategy. Meanwhile, starting from the implementation of the Two-Control-Zone policy in 1998, China has implemented numerous environmental policies in just ten years. These environmental policies have greatly improved the quality of China’s ecological environment, but their economic effects have been controversial. Given the special historical period, this paper helps assess the impact of Chinese environmental policies on employment and provides a more objective policy evaluation and implications for improving existing laws and regulations to achieve higher social welfare. To achieve this goal of balancing the improvement of the ecological environment and high employment level, environmental policies firstly should be flexible to ensure that the environmental standards follow the firm’s characteristics and regional characteristics to avoid "one size fits all". Particularly, for regions with poor economic development or having a single industrial structure, the implementation cycle of the environmental policies should be extended to ensure that they have enough time to achieve industrial restructuring and complete the environmental protection goals. Secondly, we find that environmental legislation hurts employment growth by limiting export decisions, so the government should use multiple channels to stabilize export when implementing environmental legislation. Thirdly, technological R&D and innovation play an import...

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Exploring the dynamic effects of shocks in monetary and fiscal policies on the environment of developing economies: evidence from the CS-ARDL approach

Cited by 30 publications

References 80 publications

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality

The Impact of Monetary Policy on Climate Change: A Systematic Literature Review and Future Research Recommendations

Local environmental legislation and employment growth: evidence from Chinese manufacturing firms

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