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Carbon Emissions in the SAARC Countries with Causal Effects of FDI, Economic Growth and Other Economic Factors: Evidence from Dynamic Simultaneous Equation Models

Author

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  • Rashid Latief

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Yusheng Kong

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Sohail Ahmad Javeed

    (College of Finance, Nanjing Agricultural University, Nanjing 210095, China)

  • Usman Sattar

    (College of Law and Political Science, Zhejiang Normal University, Jinhua 321004, China)

Abstract

South Asian Association for Regional Cooperation (SAARC) countries like other developing countries are the major destination for foreign investors. At the same time, these countries are facing different climate change challenges. This study aims to inspect the economic determinants of carbon emissions (CE) and dynamic causal interaction of CE with foreign direct investment (FDI), economic growth (EG), and other economic factors using panel cointegration test, dynamic ordinary least squares (DOLS) and vector error correction model (VECM) for the SAARC countries. To make the homogenous analysis, we examined the association among variables for the individual country and as a group for the period 1990 to 2016. The panel results of this study confirmed the presence of the unidirectional causal association of EG with CE. The panel results of other economic factors confirmed the causality of urban population (UP) and energy consumption (EC) with CE. Moreover, the panel results of domestic capital (DS) and inflation rate (INF) confirmed the causal association with EG. Finally, the panel results of DS revealed a causality with FDI. Based on the above results, some policy guidelines are proposed.

Suggested Citation

  • Rashid Latief & Yusheng Kong & Sohail Ahmad Javeed & Usman Sattar, 2021. "Carbon Emissions in the SAARC Countries with Causal Effects of FDI, Economic Growth and Other Economic Factors: Evidence from Dynamic Simultaneous Equation Models," IJERPH, MDPI, vol. 18(9), pages 1-22, April.
    • Handle: RePEc:gam:jijerp:v:18:y:2021:i:9:p:4605-:d:543999
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