Nexus among CO2 emissions, remittances, and financial development: a NARDL approach for India.

Abstract

The nexus of remittances and CO2 emission is very important and gathers a significant place in empirical research. This paper tries to find out the asymmetric relationship between carbon emissions, remittances, and financial development in India for the period 1980-2014. Based on the theoretical linkages, we develop a nonlinear ARDL model with the use of time series data in this study. The results of the NARDL bound test suggest that there is long-run cointegration among the variables. The findings show that positive shock in remittances causes an increase in CO2 emissions, where negative shock reduces it. The coefficient for financial development is positive but becomes statistically insignificant. Empirical results also support the existence of asymmetric long-run relationship among the variables. Based on the findings, the paper recommends the proper channelization of remittances and financial development towards environment-friendly energy sources and projects without compromising economic growth.