Shahbaz, Muhammad (2010): Does financial instability increase environmental pollution in Pakistan?
Download (187Kb) | Preview
The present aims to explore the relationship between financial instability and environmental degradation within multivariate framework using time series data for the period1972-2009 in case of Pakistan. The long run relationship is investigated by ARDL bounds testing approach to cointegration, and error correction method is applied to examine short sun dynamics. The stationarity properties of the variables are tested by applying Saikkonen and Lütkepohl (2002) structural break unit root test. Empirical evidence confirms the existence of long run relationship while financial instability increases environmental pollution in the country.
|Item Type:||MPRA Paper|
|Original Title:||Does financial instability increase environmental pollution in Pakistan?|
|Keywords:||Financial Instability, Environment, Cointegration|
|Subjects:||B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B22 - Macroeconomics|
|Depositing User:||Muhammad Shahbaz|
|Date Deposited:||09. Jun 2011 12:45|
|Last Modified:||12. Feb 2013 10:54|
Alam, S., Fatima, A., Butt, MS., (2007). Sustainable Development in Pakistan in the Context of Energy Consumption Demand and Environmental Degradation. Journal of Asian Economics 18, 825-837.
Ang, J., (2007). CO2 Emissions, Energy Consumption and Output in France. Energy Policy 35, 4772-4778.
Ang, J., (2008). The Long-run Relationship between Economic Development, Pollutant Emissions, and Energy Consumption: Evidence from Malaysia. Journal of Policy Modeling 30, 271-278.
Bannerjee, A., J. Dolado and Mestre, R., (1998). Error-correction Mechanism Tests for Cointegration in Single Equation Framework. Journal of Time Series Analysis 19, 267-83.
Barrett, S and Graddy, K., (2000). Freedom, Growth, and the Environment. Environment and Development Economics 5, 433-456.
Bello, AK and Abimbola, OM., (2010). Does the Level of Economic Growth Influence Environmental Quality in Nigeria: A Test of Environmental Kuznets Curve (EKC) Hypothesis? Pakistan Journal of Social Sciences 7, 325-329.
Birdsall,N.,Wheeler, D., (1993). Trade Policy and Industrial Pollution in Latin America: Where are the Pollution Havens? Journal of Environment and Development 2, 137–149.
Brown, R., Durbin, L. J and Evans, J. M., (1975). Techniques for Testing the Constancy of Regression Relationships over Time. Journal of the Royal Statistical Society 37, 149-192.
Brussels, J. C., (2010). Economic Crisis Cuts European Carbon Emissions. Financial Times. April 1 2010.
Buitenzorgy. M and Mol, A. P. M., (2011). Does Democracy Lead to a Better Environment? Deforestation and the Democratic Transition Peak, Environmental and Resource Economics 48, 59-70.
Capelle-Blancard, G and Laguna, M. A., (2010). How does the Stock Market Respond to Chemical Disasters? Journal of Environmental Economics and Management 59, 192-205.
Choi, E., Heshmati, A and Cho, Y., (2010). An Empirical Study of the Relationship between CO2 Emissions, Economic Growth and Openness, IZA DP No-5304.
Coondoo, D and Dinda, S., (2008). The Carbon Dioxide Emission and Income: A Temporal Analysis of Cross-country Distributional Patterns. Ecological Economics 65, 375-385.
Dasgupta, S., Laplante, B and Mamingi, N., (2001). Capital Market Responses to Environmental Performances in Developing Countries. Journal of Environmental Economics and Management 42, 310-335.
Dasgupta, S., Hong, H. J., Laplante, B and Mamingi, N., (2006). Disclosure of Environmental Violations and the Stock Market in the Republic of Korea. Ecological Economics 58, 759-777.
Declercq, B., Delarue, E and D’haeseleer, W., (2011). Impact of the Economic Recession on the European Power Sector’s CO2 Emissions. Energy Policy 39, 1677-1686.
Dinda, S., Coondoo, D., (2006). Income and Emission: A Panel Data-based Cointegration Analysis. Ecological Economics 57, 167-181.
Dutt, K., (2009). Governance, Institutions and the Environment-income Relationship: A Cross-country Study. Environment, Development and Sustainability 11, 705-723.
Enkvist, P., Denkil, J and Lin. C., (2010). Impact of Financial Crisis on Carbon Economics: Version 2.1 of the Global Greenhouse Gas Abatement Cost Curve. Mckinsey and Company.
Farzin, Y. H and Bond, C. A., (2006). Democracy and Environmental Quality. Journal of Development Economics 81, 213–235.
Fodha, M and Zaghdoud, O., (2010). Economic Growth and Pollutant Emissions in Tunisia: An Empirical Analysis of the Environmental Kuznets Curve. Energy Policy 38, 1150-1156.
Frankel, J and Romer, D., (1999). Does Trade Cause Growth? American Economic Review 89, 379–399.
Frankel, J and Rose, A., (2002). An Estimate of the Effect of Common Currencies on Trade and Income. Quarterly Journal of Economics 117, 437–466.
Friedl, B and Getzner, M., (2003). Determinants of CO2 Emissions in a Small Open Economy. Ecological Economics 45, 133-148.
Goldsmith, R., (1969). Financial Structure and Development. A Handbook, Yale University Press, 1969.
GOP., (2010). Economic Survey of Pakistan, publishes by Finance Ministry of Pakistan, Islamabad, Pakistan.
Grossman, G and Krueger, A., (1995). Economic Growth and the Environment. Quarterly Journal of Economics 110, 352–377.
Gupta, S and Goldar, B., (2005). Do Stock Markets Penalize Environment-unfriendly Behaviour? Evidence from India. Ecological Economics 52, 81-95.
Halicioglu, F., (2009). An Econometric Study of CO2 Emissions, Energy Consumption, Income and Foreign Trade in Turkey. Energy Policy 37, 1156-1164.
Hamilton, C and Turton, H., (2002). Determinants of Emissions Growth in OECD Countries. Energy Policy 30, 63-71.
Hansen, B. E. (1992). Tests for Parameter Stability in Regressions with I(1) Processes, Journal of Business and Economic Statistics, 10(3): 321-335.
Hansen, B. E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533.
Heil, M. T and Selden, T. M., (1999). Panel Stationarity with Structural Breaks: Carbon Emissions and GDP. Applied Economics Letters 6, 223-225.
Iwata, H., Keisuke, O and Sovannroeun, S., (2010). Empirical Study on the Determinants of CO2 emissions: Evidence from OECD Countries. http://mpra.ub.uni-muenchen.de/21520.
Jalil, A and Feridun, M., (2010). The Impact of Growth, Energy and Financial Development on the Environment in China: A Cointegration Analysis. Energy Economics 33, 284-291.
Jalil, A and Mahmud, S., (2009). Environment Kuznets Curve for CO2 Emissions: A Cointegration Analysis for China. Energy Policy 37, 5167-5172.
Kahuthu, A., (2010). Economic Growth and Environmental Degradation in a Global Context, Environment. Development and Sustainability 8, 55-68.
King, R. G and Levine, R., (1993). Finance and Growth: Schumpeter Might Be Right. The Quarterly Journal of Economics 108, 717-737.
Klassen, R. D and McLaughlin, C. P., (1996). The Impact of Environmental Management on Firm Performance. Management Science 8, 1199-1214.
Kuznets, S., (1955), Economic Growth and Income Inequality. The American Economic Review 45, 1-28.
Lanne, M., Lütkepohl, H and Saikkonen, P., (2002). Comparison of Unit Root Tests for Time Series with Level Shifts. Journal of Time Series Analysis 23, 667-685.
Lean, H. H., Smyth, R., 2010. CO2 emissions, electricity consumption and output in ASEAN. Applied Energy 87, 1858-1864.
Liu, Q., 2005. Impacts of oil price fluctuation to China economy. Quantitative and Technical Economics (3), 17-28.
Loayza N. and R. Ranciere. (2006). Financial Development, Financial Fragility, and Growth. Journal of Money, Credit and Banking 38, 1051-1076.
Lucas, G., Wheeler, N and Hettige, R., (1992). The Inflexion Point of Manufacture Industries: International trade and environment, World Bank Discussion Paper, No. 148, Washington.
McKinnon, R I., (1973). Money and Capital in Economic Development. Washington, D.C., The Brookings Institution.
Narayan, P. K., (2005). The Saving and Investment Nexus for China: Evidence from Cointegration Tests. Applied Economics 37, 1979-1990.
Nasir, M and Rehman, F., (2011). Environmental Kuznets Curve for Carbon Emissions in Pakistan: An Empirical Investigation. Energy Policy 39, 1857-1864.
Ng, S and Perron, P., (2001). Lag Length Selection and the Construction of Unit Root Test with Good Size and Power. Econometrica 69, 1519-1554.
Nishitani, K., (2010). An Empirical Analysis of the Effects on Firms’ Economic Performance of Implementing Environmental Management Systems. Environmental and Resource Economics 48, 569-586.
Nohman, A and Antrobus, G., (2005). Trade and the Environmental Kuznets Curve: Is Southern Africa a Pollution Heaven? South African Journal of Economics 73, 803-814.
Ouattara, B., (2004). Foreign Aid and Fiscal Policy in Senegal. University of Manchester, Manchester, UK.
Pesaran, M. H., Shin, Y and Smith, R. J., (2001). Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics 16, 289-326.
Richard, P., (2010). Financial instability and CO2 emissions, GREDI Working Paper no. 10-20, University of Sherbrooke.
Roberts, J. T and Parks, B. C., (2007). A Climate of Injustice Global Inequality, North-South Politics, and Climate Policy, MIT Press, Cambridge (Mass).
Roubini, N and Sala-i-Martin, X., (1995). A Growth Model of Inflation, Tax Evasion, and Financial Repression. Journal of Monetary Economics35, 275-301.
Sadorsky, P. (2010). The Impact of Financial Development on Energy Consumption in Emerging Economies. Energy Policy 38, 2528-2535.
Sadorsky, P. (2011). Financial Development and Energy Consumption in Central and Eastern European Frontier Economies. Energy Policy 39, 999-1006.
Saikkonen, P and Lütkepohl, H., (2002). Testing for a Unit Root in a Time Series with a Level Shift at Unknown Time. Econometric Theory (18), 313-348.
Say, N.P and Yucel, M., (2006). Energy Consumption and CO2 Emissions in Turkey: Empirical Analysis and Future Projection Based on an Economic Growth. Energy Policy 34, 3870-3876.
Schumpeter, J. A. (1911). The Theory of Economic Development. Harvard University Press, Cambridge, MA.
Scruggs, L. A., (1998). Political and Economic Inequality and the Environment. Ecological Economics 26, 259-275.
Selden T. M and Song, D., (1994). Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions? Journal of Environmental Economics and Management 27, 147-162.
Shahbaz, M., (2009a). A Reassessment of Finance-Growth Nexus for Pakistan: Under the Investigation of FMOLS and DOLS Techniques. ICFAI Journal of Applied Economics, 65-80.
Shahbaz, M., Islam, F and Butt, M. S., (2011). Financial Development, Energy Consumption and CO2 Emissions: Evidence from ARDL Approach for Pakistan. MPRA Paper 30138, University Library of Munich, Germany.
Shahbaz, M., Lean, HH., Shabbir, MS., (2010c). Environmental Kuznets Curve and the Role of Energy Consumption in Pakistan. Discussion Paper DEVDP 10/05, Development Research Unit, Monash University, Australia.
Shahbaz. M., Shamim, A and Naveed, A., (2010b). Macroeconomic Environment and Financial Sector's Performance: Econometeric Evidence from Three Traditional Approaches. The IUP Journal of Financial Economics 1, 103-123.
Shaw, E. S., (1973). Financial Deepening in Economic Development. Oxford University Press, London and New York.
Stern, D.I., (2004). The Rise and Fall of the Environmental Kuznets Curve. World Development 32, 1419-1438.
Suri, V and Chapman, D., (1998). Economic Growth, Trade and the Energy: Implications for the Environmental Kuznets Curve. Ecological Economics 25, 195-208.
Talukdar, D and Meisner, C. M., (2001). Does the Private Sector Help or Hurt the Environment? Evidence from Carbon Dioxide Pollution in Developing Countries. World Development 29, 827-840.
Tamazian, A., Piñeiro, J and Vadlamannati, K.C., (2009). Does Higher Economic and Financial Development Lead to Environmental Degradation: Evidence from BRIC Countries? Energy Policy 37, 246–253.
Tamazian, A and Rao, B. B., (2010). Do Economic, Financial and Institutional Developments Matter for Environmental Degradation? Evidence from Transitional Economies. Energy Economics 32, 137-145.
Torras M, and Boyce, J. K., (1998). Income, Inequality, and Pollution: A Reassessment of the Environmental Kuznets Curve. Ecological Economics 25, 147–160.
Wyckoff, A. W and Roop, J. M., (1994). The Embodiment of Carbon in Imports of Manufactured Products: Implications for International Agreements on Greenhouse Gas Emissions. Energy Policy 22, 187-194.
Yuxiang, K and Chen, Z., (2010). Financial Development and Environmental Performance: Evidence from China. Environment and Development Economics 16, 1-19.