IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i13p10463-d1185785.html
   My bibliography  Save this article

Effects of Fiscal and Monetary Policies, Energy Consumption and Economic Growth on CO 2 Emissions in the Turkish Economy: Nonlinear Bootstrapping NARDL and Nonlinear Causality Methods

Author

Listed:
  • Melike Bildirici

    (Department of Economics, FEAS, Davutpaşa Campus, Yıldız Technical University, Esenler, Istanbul 34220, Türkiye)

  • Sema Yılmaz Genç

    (Department of Economics, FEAS, Davutpaşa Campus, Yıldız Technical University, Esenler, Istanbul 34220, Türkiye)

  • Özgür Ömer Ersin

    (Department of International Trade, Faculty of Business, Sutluce Campus, İstanbul Ticaret University, Beyoğlu, Istanbul 34445, Türkiye)

Abstract

Governments use fiscal and monetary policies to direct the economy toward economic expansion. However, both policies could have impacts on the environment. The study investigates the effects of fiscal and monetary policy, energy consumption and economic growth on carbon dioxide emissions for the Turkish economy from 1978 to 2021 with novel nonlinear bootstrapping NBARDL and nonlinear NBVARDL for nonlinear causality testing. The methods are robust to degenerate cointegration. By differentiating between expansionary and contractionary fiscal and monetary policies, the results determined the presence of long-run cointegrated relationships between the analyzed variables and emissions. The positive effects of both economic policies on emissions cannot be rejected, which become particularly pronounced for expansionary policies in addition to emission enhancing effects of energy consumption and growth. The effects of contractionary monetary policy are also positive in contrast to a set from the literature. Nonlinear causality tests favor one-way causality from energy consumption and from growth to emissions. The one-way causality from energy consumption and economic growth to emissions suggest non-existent feedback effects, leading to concerns for the environment. Expansionary and recessionary fiscal policies have one-way causal impacts on energy, leading to further environmental degradation. The findings highlight the severity of environmental problems caused by economic policies. Important policy recommendations are generated.

Suggested Citation

  • Melike Bildirici & Sema Yılmaz Genç & Özgür Ömer Ersin, 2023. "Effects of Fiscal and Monetary Policies, Energy Consumption and Economic Growth on CO 2 Emissions in the Turkish Economy: Nonlinear Bootstrapping NARDL and Nonlinear Causality Methods," Sustainability, MDPI, vol. 15(13), pages 1-23, July.
  • Handle: RePEc:gam:jsusta:v:15:y:2023:i:13:p:10463-:d:1185785
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/13/10463/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/15/13/10463/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Liang Liu & Yuting Zhao & Xiujuan Gong & Shu Liu & Mengyue Li & Yirui Yang & Pan Jiang, 2023. "Threshold Effect of Environmental Regulation and Green Innovation Efficiency: From the Perspective of Chinese Fiscal Decentralization and Environmental Protection Inputs," IJERPH, MDPI, vol. 20(5), pages 1-17, February.
    2. Chan, Ying Tung, 2020. "Are macroeconomic policies better in curbing air pollution than environmental policies? A DSGE approach with carbon-dependent fiscal and monetary policies," Energy Policy, Elsevier, vol. 141(C).
    3. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    4. Robert McNown & Chung Yan Sam & Soo Khoon Goh, 2018. "Bootstrapping the autoregressive distributed lag test for cointegration," Applied Economics, Taylor & Francis Journals, vol. 50(13), pages 1509-1521, March.
    5. López, Ramón & Galinato, Gregmar I. & Islam, Asif, 2011. "Fiscal spending and the environment: Theory and empirics," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 180-198, September.
    6. Fu, Haoliang & Guo, Wenwei & Sun, Zheng & Xia, Ting, 2023. "Asymmetric impact of natural resources rent, monetary and fiscal policies on environmental sustainability in BRICS countries," Resources Policy, Elsevier, vol. 82(C).
    7. Goh, Soo Khoon & Sam, Chung Yan & McNown, Robert, 2017. "Re-examining foreign direct investment, exports, and economic growth in asian economies using a bootstrap ARDL test for cointegration," Journal of Asian Economics, Elsevier, vol. 51(C), pages 12-22.
    8. Halkos, George E. & Paizanos, Epameinondas Α., 2016. "The effects of fiscal policy on CO2 emissions: Evidence from the U.S.A," Energy Policy, Elsevier, vol. 88(C), pages 317-328.
    9. Wallace E. Oates & Wallace E. Oates, 2004. "Fiscal Decentralization and Economic Development," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 21, pages 377-383, Edward Elgar Publishing.
    10. Cheng, Ya & Awan, Usama & Ahmad, Shabbir & Tan, Zhixiong, 2021. "How do technological innovation and fiscal decentralization affect the environment? A story of the fourth industrial revolution and sustainable growth," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    11. Elkhan Richard Sadik-Zada, 2021. "Addressing the growth and employment effects of the extractive industries: white and black box illustrations from Kazakhstan," Post-Communist Economies, Taylor & Francis Journals, vol. 33(4), pages 402-434, May.
    12. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    13. Annicchiarico, Barbara & Di Dio, Fabio, 2015. "Environmental policy and macroeconomic dynamics in a new Keynesian model," Journal of Environmental Economics and Management, Elsevier, vol. 69(C), pages 1-21.
    14. Adewuyi, Adeolu O., 2016. "Effects of public and private expenditures on environmental pollution: A dynamic heterogeneous panel data analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 489-506.
    15. Daniel L. Millimet, 2003. "Assessing the Empirical Impact of Environmental Federalism," Journal of Regional Science, Wiley Blackwell, vol. 43(4), pages 711-733, November.
    16. Dongyan, Li, 2009. "Fiscal and tax policy support for energy efficiency retrofit for existing residential buildings in China's northern heating region," Energy Policy, Elsevier, vol. 37(6), pages 2113-2118, June.
    17. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    18. Soyoung Park & Sungchan Kim, 2023. "Does fiscal decentralization affect local governments' strategic behaviours? Evidence from South Korea," Pacific Economic Review, Wiley Blackwell, vol. 28(1), pages 124-141, February.
    19. Guangrong Ma & Jie Mao, 2018. "Fiscal Decentralisation and Local Economic Growth: Evidence from a Fiscal Reform in China," Fiscal Studies, John Wiley & Sons, vol. 39(1), pages 159-187, March.
    20. Barbara Annicchiarico & Fabio Di Dio, 2017. "GHG Emissions Control and Monetary Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(4), pages 823-851, August.
    21. He, Qichun, 2015. "Fiscal decentralization and environmental pollution: Evidence from Chinese panel data," China Economic Review, Elsevier, vol. 36(C), pages 86-100.
    22. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
    23. Konstantinos Bletsas & Georgios Oikonomou & Minas Panagiotidis & Eleftherios Spyromitros, 2022. "Carbon Dioxide and Greenhouse Gas Emissions: The Role of Monetary Policy, Fiscal Policy, and Institutional Quality," Energies, MDPI, vol. 15(13), pages 1-24, June.
    24. Chen, Chuanqi & Pan, Dongyang & Huang, Zhigang & Bleischwitz, Raimund, 2021. "Engaging central banks in climate change? The mix of monetary and climate policy," Energy Economics, Elsevier, vol. 103(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bai, Xue & Zhong, Jingqiu & Huang, Dong, 2024. "Economic instruments for natural resource efficiency: The role of carbon taxation and fiscal policy," Resources Policy, Elsevier, vol. 89(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chan, Ying Tung, 2020. "Are macroeconomic policies better in curbing air pollution than environmental policies? A DSGE approach with carbon-dependent fiscal and monetary policies," Energy Policy, Elsevier, vol. 141(C).
    2. Nor Salwati Othman & Hussain Ali Bekhet, 2021. "Dynamic Effects of Malaysia's Government Spending on Environment Quality: Bridging STIRPAT and EKC Hypothesis," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 343-355.
    3. Yulan Lv & Yumeng Pang & Buhari Doğan, 2022. "The role of Chinese fiscal decentralization in the governance of carbon emissions: perspectives from spatial effects decomposition and its heterogeneity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 635-668, June.
    4. Melike Bildirici & Yasemin Asu Çırpıcı & Özgür Ömer Ersin, 2023. "Effects of Technology, Energy, Monetary, and Fiscal Policies on the Relationship between Renewable and Fossil Fuel Energies and Environmental Pollution: Novel NBARDL and Causality Analyses," Sustainability, MDPI, vol. 15(20), pages 1-27, October.
    5. Li, Xin & Li, Zheng & Su, Chi-Wei & Umar, Muhammad & Shao, Xuefeng, 2022. "Exploring the asymmetric impact of economic policy uncertainty on China's carbon emissions trading market price: Do different types of uncertainty matter?," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
    6. Xianpu Xu & Shan Li, 2022. "Neighbor-Companion or Neighbor-Beggar? Estimating the Spatial Spillover Effects of Fiscal Decentralization on China’s Carbon Emissions Based on Spatial Econometric Analysis," Sustainability, MDPI, vol. 14(16), pages 1-26, August.
    7. Ali, Adnan & Ramakrishnan, Suresh & Faisal,, 2022. "Financial development and natural resources. Is there a stock market resource curse?," Resources Policy, Elsevier, vol. 75(C).
    8. Bertelli, Stefano & Vacca, Gianmarco & Zoia, Maria, 2022. "Bootstrap cointegration tests in ARDL models," Economic Modelling, Elsevier, vol. 116(C).
    9. Maxwell Chukwudi Udeagha & Marthinus Christoffel Breitenbach, 2023. "Revisiting the nexus between fiscal decentralization and CO2 emissions in South Africa: fresh policy insights," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-46, December.
    10. Muhammad Shahid & Rukhsana Kalim, 2020. "Decentralized Tax Revenue, Institutional Complementarity and Economic Growth: A Time Series Analysis of Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 25-33.
    11. George, Ammu & Huang, Jingong & Xie, Taojun, 2022. "Assessing the dual mandates of sustainability-linked monetary policy," Energy Economics, Elsevier, vol. 113(C).
    12. Pan, Lijun & Wang, Yangjie & Sun, Xiaofei & Sadiq, Muhammad & Dagestani, Abd Alwahed, 2023. "Natural resources: A determining factor of geopolitical risk in Russia? Revisiting conflict-based perspective," Resources Policy, Elsevier, vol. 85(PA).
    13. Bibhuti Sarker & Farid Khan, 2020. "Nexus between foreign direct investment and economic growth in Bangladesh: an augmented autoregressive distributed lag bounds testing approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-18, December.
    14. Dulal Chandra Pattak & Farian Tahrim & Mahdi Salehi & Liton Chandra Voumik & Salma Akter & Mohammad Ridwan & Beata Sadowska & Grzegorz Zimon, 2023. "The Driving Factors of Italy’s CO 2 Emissions Based on the STIRPAT Model: ARDL, FMOLS, DOLS, and CCR Approaches," Energies, MDPI, vol. 16(15), pages 1-21, August.
    15. Shahbaz, Muhammad & Gozgor, Giray & Hammoudeh, Shawkat, 2019. "Human capital and export diversification as new determinants of energy demand in the United States," Energy Economics, Elsevier, vol. 78(C), pages 335-349.
    16. Mohamed Maher & Yanzhi Zhao, 2022. "Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(8), pages 956-979, November.
    17. Qianyi Li & Md Qamruzzaman, 2023. "Innovation-Led Environmental Sustainability in Vietnam—Towards a Green Future," Sustainability, MDPI, vol. 15(16), pages 1-34, August.
    18. Mamon Adam Maarof & Dildar Haydar Ahmed & Ahmed Samour, 2023. "Fiscal Policy, Oil Price, Foreign Direct Investment, and Renewable Energy—A Path to Sustainable Development in South Africa," Sustainability, MDPI, vol. 15(12), pages 1-16, June.
    19. Shahbaz, Muhammad & Nasir, Muhammad Ali & Hille, Erik & Mahalik, Mantu Kumar, 2020. "UK's net-zero carbon emissions target: Investigating the potential role of economic growth, financial development, and R&D expenditures based on historical data (1870–2017)," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    20. Fu, Haoliang & Guo, Wenwei & Sun, Zheng & Xia, Ting, 2023. "Asymmetric impact of natural resources rent, monetary and fiscal policies on environmental sustainability in BRICS countries," Resources Policy, Elsevier, vol. 82(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:13:p:10463-:d:1185785. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.