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Exploring the nexus between tax revenues, government expenditures, and climate change: empirical evidence from Belt and Road Initiative countries

Author

Listed:
  • Peng Yuelan

    (Shanxi Institute of Economics Management)

  • Muhammad Waqas Akbar

    (Shanxi University of Finance and Economics)

  • Zeenat Zia

    (Shanxi University of Finance and Economics)

  • Muhammad Imran Arshad

    (Virtual University)

Abstract

The greenhouse gas (GHG) emissions generated by human activities are the leading cause of rapid climate change. High energy consumption projects in the BRI initiative have more impact on the environment. Therefore, fiscal policy instruments are essentials to combat climate change. This paper explores the impact of fiscal policy instruments, FDI, energy use, and GDP on climate change in Belt and Road Initiative (BRI) countries. The study utilizes fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS) long-run econometric models to estimate the long-run results in the full panel and individual countries. Furthermore, Dumitrescu and Hurlin’s (2012) causality test has been utilized to observe the short-run causalities among variables. The empirical findings confirmed that fiscal policy instruments expressively help to mitigate climate change, while foreign direct investment significantly intensifies the climate change in BRI. The short-run heterogeneous causality endorses bidirectional causality between fiscal policy instruments and climate change. It suggests that policy-makers should consider fiscal policy instruments to mitigate climate change in the BRI countries.

Suggested Citation

  • Peng Yuelan & Muhammad Waqas Akbar & Zeenat Zia & Muhammad Imran Arshad, 2022. "Exploring the nexus between tax revenues, government expenditures, and climate change: empirical evidence from Belt and Road Initiative countries," Economic Change and Restructuring, Springer, vol. 55(3), pages 1365-1395, August.
    • Handle: RePEc:kap:ecopln:v:55:y:2022:i:3:d:10.1007_s10644-021-09349-1
    DOI: 10.1007/s10644-021-09349-1
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    More about this item

    Keywords

    Belt and Road Initiative; Climate change; FDI; Government expenditures; Tax revenues;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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