Revisiting the relationship between remittances and CO2 emissions by applying a novel dynamic simulated ARDL: empirical evidence from G-20 economies.

Abstract

The current study looks at the causes of carbon dioxide (CO2) emissions by considering the implications of remittances in the presence of economic growth, financial development, and energy consumption in the case of selected four G-20 economies over the period 1990-2019. This study first uses the dynamic simulated ARDL model to stimulate, estimate, and plot to predict graphs of negative and positive changes occurring in the variables along with their short-run and long-run relationships. Results of the ARDL bounds test confirm a long-term relationship among remittances, financial development, economic growth energy consumption, and CO2 emissions. Furthermore, the error correction model (ECM) also confirms the long-run relationship among CO2 emissions, remittances, financial development, economic growth, and energy use. The results of a novel dynamic simulated ARDL disclosed that financial development is completely connected to CO2 emissions in Mexico and India in the long run. On the other hand, results confirm that there is a positive relationship between remittances and CO2 emissions in the case of Australia, Germany, and India, but this relationship is insignificant with CO2 emissions in the case of Mexico. The result further disclosed that renewable energy exerts a significant impact on CO2 in Australia, Mexico, India, and Germany in the long run while remittances wield a significant impact on CO2 emissions in Australia, Mexico, and India. Moreover, the findings concluded that GDP has significant nexus with CO2 in the long run in the case of Australia, Mexico, and Germany. This study uses up new visions for the economies of G-20 countries to sustain financial and economic growth by protecting the environment from pollution through its efficient national environmental policy, fiscal policy, and monetary policy.