Asymmetric impact of economic growth, financial development and energy consumption on CO2 emissions in Vietnam

Abstract

This study aims to investigate the asymmetric effects of economic growth, financial development, and energy consumption on CO2 emissions in Vietnam over the period 1995–2020. By doing so, we employ Quantile on Quantile Regression introduced by Sim and Zhou (2015) and Granger Causality in different quantiles developed by Troster (2018). Our findings indicate that there is a positive influence of economic growth, financial development, and energy usage on CO2 emissions at most quantiles, which implies that these macroeconomic factors would increase CO2 emissions in this country. In addition, economic development requires more energy, resulting in a rise in environmental degradation is inevitable in the short run. Nevertheless, it is necessary for Vietnam to pay attention to enhancing the use of clean energy and controlling CO2 emissions in order to achieve sustainable development. Furthermore, financial policies are able to support the development of renewable energy and contribute to reducing CO2 emissions. The Vietnamese government should develop a rough, transparent, and relatively stable policy mechanism in the long run, including emission benchmark, tax incentives and other incentives to encourage private investment and foreign direct investment participating in the process of technological innovation, clean energy and renewable energy.