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The role of GHG emissions on capital accumulation in emerging countries. A dynamic analysis on BICS economies

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  • Esposito, Luca
  • Tedeschi, Marco

Abstract

This study examines the dynamic relationship between GreenHouse Gas (GHG) emissions, energy intensity, and Gross Fixed Capital Formation (GFCF, as capital accumulation proxy) in Brazil, India, China, and South Africa (BICS). Using annual data from 1990 to 2022, we analyze the long- and short-term effects on GFCF using a simple Autoregressive Distributed Lags (ADL) model. The paper also simulates two GHG tax policy scenarios — a ‘soft’ and an ‘aggressive’ policy based on the OECD report — to explore their potential impact on investment accumulation. Our findings reveal significant heterogeneity across countries: while capital accumulation is a persistent phenomenon, energy intensity and GHG emissions have different roles. We provide valuable insights for policymakers designing climate strategies and economic policies.

Suggested Citation

  • Esposito, Luca & Tedeschi, Marco, 2025. "The role of GHG emissions on capital accumulation in emerging countries. A dynamic analysis on BICS economies," International Review of Financial Analysis, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:finana:v:105:y:2025:i:c:s1057521925005034
    DOI: 10.1016/j.irfa.2025.104416
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    Keywords

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    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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