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Fiscal policy-green growth nexus: Does financial efficiency matter in top carbon emitter economies?

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  • Huizheng Liu

    (Beijing University of Technology)

  • Muhammad Afaq Haider Jafri

    (Beijing University of Technology)

  • Peihua Zhu

    (Beijing University of Technology)

  • Muhammad Hafeez

    (University of Agriculture)

Abstract

Environmental pollution and climatic change impel economies to discover new methods for sustainable economic development. Green growth is considered an effective way of environmental sustainability. From this perspective, this study evaluates the impact of fiscal policy shocks, financial institutions, and markets development on the green growth of high-polluting economies. The study employed a CS-NARDL approach for investigating the short-run and long-run estimates. The results show that positive shocks in government spending tend to significantly increase green growth in the long-run. In contrast, the negative shock is government spending does not report any significant influence on green growth in the long-run. Financial institution’s and financial market’s efficiency have a positive impact on green growth in the long-run. Thus, the findings of the study suggest that government spending should be increased with a particular focus on financial markets efficiency and financial institution’s efficiency to enhance green growth.

Suggested Citation

  • Huizheng Liu & Muhammad Afaq Haider Jafri & Peihua Zhu & Muhammad Hafeez, 2024. "Fiscal policy-green growth nexus: Does financial efficiency matter in top carbon emitter economies?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 20379-20396, August.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:8:d:10.1007_s10668-023-03478-5
    DOI: 10.1007/s10668-023-03478-5
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