Economic strategies for efficient use of natural resources: The impact of carbon taxation and fiscal policy

Abstract

This study examines the efficacy of fiscal policies and carbon taxation as mechanisms to promote the efficient utilization of natural resources within the BRICS economies, against the backdrop of environmental sustainability challenges. Analyzing data from 1995 to 2018, the study incorporates Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG), to provide robust empirical evidence. These methodologies adeptly address unobserved heterogeneity across cross-sections, offering insightful analyses into the impact of fiscal tools and carbon taxes. By leveraging a comprehensive dataset and engaging in a detailed policy analysis, the paper highlights the pivotal role of these economic instruments in mitigating environmental externalities associated with resource-intensive industries. Furthermore, it delineates how fiscal interventions complement market-based incentives like carbon taxes to enhance resource efficiency and curtail greenhouse gas emissions. We contribute valuable insights to the discourse on policy development and sustainable resource management within the BRICS economies.