Abstract
Environmental degradation is causing global warming, which is of the utmost concern to both physical and social scientists. A number of potential determinants of environmental degradation are analysed in the literature. This study examines the role of government expenditure and financial development in environmental degradation in the context of the environmental Kuznets curve (EKC) hypothesis for the Venezuelan economy. Time series data have been analysed for this purpose. The long-term relationship between the variables in this study is established through a bounds test in the presence of an unknown structural break. The results of this study confirm the EKC hypothesis. It is found that energy use is harming the quality of the environment not only in the long run but also in the short run. This study finds a positive impact of government expenditure on environmental degradation, which indicates that the Venezuelan government is not taking its expenditure for a sustainable environment into account. Moreover, this study finds that financial development is hindering environmental degradation. This means that financial institutions in Venezuela can help to develop the concept of sustainable energy in the country and the Venezuelan government can reduce carbon emissions through financial development.
Highlights
Environmental degradation is causing global warming, which is of the utmost concern to both physical and social scientists as it has adverse effects on human beings [1]
It is advised that the government encourage the construction of gas stations around the country in order to reduce the use of diesel and gasoline in transport
This study determines the effect of energy use, financial development, and government expenditure on environmental degradation in Venezuela
Summary
Environmental degradation is causing global warming, which is of the utmost concern to both physical and social scientists as it has adverse effects on human beings [1]. Among the greenhouse gases, carbon emissions contribute the most to global warming. This is the reason that carbon emissions are used as a proxy for environmental degradation in a number of empirical studies [2, 3, 4]. The most prominent determinant of environmental degradation is economic activity.
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