Does geopolitical risk escalate environmental degradation in Turkey? Evidence from a Fourier approach

Abstract

AbstractThis study examines the long-run impacts of geopolitical risk on carbon dioxide (CO2) emissions in Turkey using Shin and Fourier Shin cointegration methods for yearly observations from 1985 to 2019. The cointegration test results reveal a long-run relation between CO2 emissions and geopolitical risk, economic growth, renewable energy, and the population size in Turkey. According to dynamic ordinary least squares estimation, geopolitical risk and renewable energy consumption have negative and statistically significant impacts on CO2 emissions, whereas economic growth and population size have positive and statistically significant effects on CO2 in the long-run. This shows that increases in geopolitical risks tend to reduce CO2 emissions in Turkey, by depressing production in polluting industries as well as economic growth. In addition, the study performs TY and Fourier TY causality analyses to check for consistency (or robustness) in the cointegration results. Accordingly, the Fourier TY test results demonstrate a unidirectional relationship from geopolitical risk and population size to CO2 emissions, whereas the Toda–Yamamoto test procedure indicates no causal relationship between the series in the long run. Overall, increases in geopolitical risks decrease the rate of production and pollution in the polluting sector in Turkey. However, this also means a decrease in economic growth rates for Turkey which focuses its economic policy and strategy on sustainable growth and development. Therefore, it is very important for Turkey to immediately implement an environmental practice that will not harm its economic policies.