The role of macroeconomic development on carbon emissions for 15 Asian countries: panel ARDL approach

Abstract

This article utilised the panel autoregressive distributed lag (ARDL) model to examine the link between macroeconomic developments and carbon emissions for 15 Asian countries from 1990 to 2013. The results of the panel ARDL model showed that there exist long-run equilibrium relationships between principal macroeconomic variables and carbon emissions in the sample. The long-run elasticity of renewable energy and fossil fuels energy consumption with respect to CO2 emissions was calculated as −0.299 and 0.967, respectively. The long-run elasticity of GDP, financial development, urban population density and industry value added share with respect to CO2 emissions was calculated as 0.473, 0.079, −0.633 and −0.10, respectively. FDI was significantly negatively related to CO2 emissions which were calculated as −0.06 in the short-run. These results suggested that FDI inflow was not yet an environmental threat for Asian economies. Renewable energy and upgrades to industry value added share will help various governments mitigate carbon emissions.