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Does institutional quality affect CO2 emissions? Evidence from explainable artificial intelligence models

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  • Stef, Nicolae
  • Başağaoğlu, Hakan
  • Chakraborty, Debaditya
  • Ben Jabeur, Sami

Abstract

Although the debate regarding the impact of high-quality institutional measures to address climate change associated with global carbon dioxide (CO2) emissions has gained increasing attention, there is insufficient quantitative evidence to support this debate. Using data from 136 countries between 1996 and 2016, we provide unique and compelling evidence that transcendent institutional measures and conscious government policies for environmentally sound and sustainable economic growth can effectively reduce CO2 emissions. Our research reveals that effective climate change policies must be associated with improvement in at least three main institutional dimensions: protection of property rights (the rule of law), citizens' participation in elections and freedom of expression (voice), and control of corruption. Climate-friendly economic policies must consider improving such institutional features while simultaneously advancing economic development, increasing the use of renewable energy by private and public entities, and significantly reducing the consumption of fossil fuels.

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  • Stef, Nicolae & Başağaoğlu, Hakan & Chakraborty, Debaditya & Ben Jabeur, Sami, 2023. "Does institutional quality affect CO2 emissions? Evidence from explainable artificial intelligence models," Energy Economics, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:eneeco:v:124:y:2023:i:c:s0140988323003201
    DOI: 10.1016/j.eneco.2023.106822
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    More about this item

    Keywords

    Explainable artificial intelligence; CO2 emissions; Institutional quality; Gross domestic product per capita; Renewable energy; Fossil fuel;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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