Sustainability | VOL. 13

Fiscal and Budgetary Policy Efforts towards Climate Change Mitigation in Romania

Publication Date Mar 5, 2021


To mitigate the negative effects of climate change on the environment, the Member States of the European Union implement fiscal measures and commit budgetary expenditures to ensure sustainable economic development. Romania, in line with the Union’s objectives, resorted to the application of a system of environmental taxes and provided in the budgetary policy government expenditures for environmental protection. The aim of the research is to highlight the effects of these measures on the environment by analysing the short-run and long-run causal relationships between greenhouse gas emissions, green taxes and government expenditures on environmental protection. Autoregressive Distributed Lag (ARDL) method and Granger causality tests were used to demonstrate the existence of these relationships and the intensity with which they manifest. Following the analysis, we identified a significant long-run influence of government spending on environmental protection on greenhouse gas emissions but also numerous short-run and long-run causal relationships between greenhouse gas emissions and green taxes, applied in Romania. The results of the research consider the impact of public expenses for environment protection, a variable not yet applied for Romania, on greenhouse gas emissions’ decrease, in correlation with environmental taxes per source of origin.

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Greenhouse Gas Emissions
Long-run Causal Relationships
Green Taxes
Negative Effects Of Climate Change
Short-run Causal Relationships
Autoregressive Distributed Lag
Short-run Relationships
Granger Causality Tests
Environmental Protection
Budgetary Expenditures

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