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Economic growth, environmental degradation and business cycles in Eswatini

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  • Phiri, Andrew

Abstract

This study investigates the impact of the business cycle on the Environmental Kuznets Curve (EKC) for the Eswatini Kingdom over the period 1970-2014. To this end, we employ the nonlinear autoregressive distributive lag (NARDL) model to capture the long-run and short-run cointegration effects between economic activity and greenhouse gas (GHG) emissions over different phases of the business cycle. Our findings reveal that economic activity only degrades the environment during upswing of the economic cycle whilst this relationship is insignificant during downswing of the cycle. We specifically compute a value of $3.57 worth of output been gained at the cost of a metric unit of emissions during economic expansionary phases. Altogether, these results insinuate much needed government intervention in the market for emissions via environmental tax reforms (ETR) which should be designed with countercyclical bias towards upswing the business cycle.

Suggested Citation

  • Phiri, Andrew, 2019. "Economic growth, environmental degradation and business cycles in Eswatini," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 15(3).
    • Handle: RePEc:ags:pdcbeh:301158
    DOI: 10.22004/ag.econ.301158
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    More about this item

    Keywords

    Demand and Price Analysis;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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