IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v16y2025i2d10.1007_s13132-024-02267-3.html
   My bibliography  Save this article

Does Economic Policy Impact the Environment in South Asia? The Role of Disaggregated Energy Consumption in an EKC Framework

Author

Listed:
  • Md. Saiful Islam

    (University of Hail)

  • Sk Habibur Rahaman

    (Manarat International University)

Abstract

Economic policies often play a substantial role in shaping environmental quality worldwide. In light of this, this research analyzes the impact of economic policy, particularly “fiscal and monetary policy (FMP)” on CO2 discharges and ecological footprint (EF) in South Asian (SA) countries based on the “environmental Kuznets curve (EKC)” framework, controlling disaggregated energy consumption. It employs a “pooled mean group (PMG)” estimate and a “Dumitrescu-Hurlin causality check” using panel data for the years 1990–2021. The PMG estimate confirms a persistent connection between variables of interest. The research backs up the EKC hypothesis for the SA nations, showing a link between reduced ecological footprint and CO2 discharges, increased usage of renewable energy, and FMP. Nonrenewable energy use increases ecological footprint and carbon emissions, whereas per capita GDP increases pollution, and GDP2 per capita lowers pollution. The D-H causality testing confirms the reliability of PMG results by revealing several unidirectional and bidirectional causal relationships. Based on our research, we conclude that efficient fiscal and monetary instruments are one of the most essential tools for reducing SA countries’ ecological footprints and CO2 emissions.

Suggested Citation

  • Md. Saiful Islam & Sk Habibur Rahaman, 2025. "Does Economic Policy Impact the Environment in South Asia? The Role of Disaggregated Energy Consumption in an EKC Framework," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 10967-10991, June.
    • Handle: RePEc:spr:jknowl:v:16:y:2025:i:2:d:10.1007_s13132-024-02267-3
    DOI: 10.1007/s13132-024-02267-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-024-02267-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-024-02267-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    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. 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.
    3. Liu, Yang & Han, Liyan & Yin, Ziqiao & Luo, Kongyi, 2017. "A competitive carbon emissions scheme with hybrid fiscal incentives: The evidence from a taxi industry," Energy Policy, Elsevier, vol. 102(C), pages 414-422.
    4. Sarah Harper, 2013. "Population–Environment Interactions: European Migration, Population Composition and Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(4), pages 525-541, August.
    5. Jalil, Abdul & Feridun, Mete, 2011. "The impact of growth, energy and financial development on the environment in China: A cointegration analysis," Energy Economics, Elsevier, vol. 33(2), pages 284-291, March.
    6. McAusland, Carol, 2008. "Trade, politics, and the environment: Tailpipe vs. smokestack," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 52-71, January.
    7. Mehmet Balcilar & Serhan Çiftçioğlu & Hasan Güngör, 2016. "The Effects Of Financial Development On Investment In Turkey," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-21, September.
    8. Lopez, Ramon E. & Palacios, Amparo, 2010. "Have Government Spending and Energy Tax Policies Contributed to make Europe Environmentally Cleaner?," Working Papers 94795, University of Maryland, Department of Agricultural and Resource Economics.
    9. 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.
    10. Rausch, Sebastian, 2013. "Fiscal consolidation and climate policy: An overlapping generations perspective," Energy Economics, Elsevier, vol. 40(S1), pages 134-148.
    11. 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.
    12. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    13. 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.
    14. 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.
    15. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    16. Md. Saiful Islam, 2021. "Influence of economic growth on environmental pollution in South Asia: a panel cointegration analysis," Asia-Pacific Journal of Regional Science, Springer, vol. 5(3), pages 951-973, October.
    17. Yu, Jian & Shi, Xunpeng & Guo, Dongmei & Yang, Longjian, 2021. "Economic policy uncertainty (EPU) and firm carbon emissions: Evidence using a China provincial EPU index," Energy Economics, Elsevier, vol. 94(C).
    18. 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).
    19. Usama Al-Mulali & Ilhan Ozturk & Hooi Lean, 2015. "The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 621-644, October.
    20. Halkos, George E. & Paizanos, Epameinondas Α., 2013. "The effect of government expenditure on the environment:An empirical investigation," Ecological Economics, Elsevier, vol. 91(C), pages 48-56.
    21. Najabat Ali & Khamphe Phoungthong & Kuaanan Techato & Waheed Ali & Shah Abbas & Joshuva Arockia Dhanraj & Anwar Khan, 2022. "FDI, Green Innovation and Environmental Quality Nexus: New Insights from BRICS Economies," Sustainability, MDPI, vol. 14(4), pages 1-17, February.
    22. 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).
    23. McAusland, Carol, 2003. "Trade, Politics,and the Environment: Tailpipe vs. Smokestack," University of California at Santa Barbara, Economics Working Paper Series qt0406x646, Department of Economics, UC Santa Barbara.
    24. 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.
    25. 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).
    26. Haider Mahmood & Anass Hamadelneel Adow & Muzafar Abbas & Asim Iqbal & Muntasir Murshed & Maham Furqan, 2022. "The Fiscal and Monetary Policies and Environment in GCC Countries: Analysis of Territory and Consumption-Based CO 2 Emissions," Sustainability, MDPI, vol. 14(3), pages 1-13, January.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. Arjun & Bibhuti Ranjan Mishra, 2025. "Asymmetric role of environmental policy stringency, fiscal, and monetary policy on environmental sustainability: Evidence from BRICS‐T countries," Natural Resources Forum, Blackwell Publishing, vol. 49(2), pages 1187-1218, May.
    3. 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).
    4. 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.
    5. Halkos, George & Paizanos, Epameinondas, 2015. "Effects of Macroeconomic Policy on Air Quality: Evidence from the US," MPRA Paper 62001, University Library of Munich, Germany.
    6. Ivan Hajdukovic, 2021. "Interactions among macroeconomic policies, the energy market and environmental quality," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 861-913, October.
    7. 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).
    8. 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).
    9. Thanh Phuc Nguyen & Trang Thi-Thuy Duong, 2025. "Asymmetric Effects of Fiscal Policy and Foreign Direct Investment Inflows on CO 2 Emissions—An Application of Nonlinear ARDL," Sustainability, MDPI, vol. 17(6), pages 1-21, March.
    10. Halkos, George & Paizanos, Epameinondas, 2015. "Environmental Macroeconomics: A critical literature review and future empirical research directions," MPRA Paper 67432, University Library of Munich, Germany.
    11. MBASSI, Christophe Martial & HYOBA, Suzanne Edwige Clarisse & SHAHBAZ, Muhammad, 2023. "Does monetary policy really matter for environmental protection? The case of inflation targeting," Research in Economics, Elsevier, vol. 77(3), pages 427-452.
    12. Ramlogan, Avinash & Nelson, Andell, 2024. "Assessing the influence of fiscal and monetary policies on carbon dioxide emissions," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(3).
    13. Alotaish Mohammed Saud M. & Ping Guo & Ihtisham ul Haq & Guoqin Pan & Alam Khan, 2019. "Do government expenditure and financial development impede environmental degradation in Venezuela?," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-13, January.
    14. Juhyun Oh, 2023. "The Effects of Local Government Expenditures on Carbon Dioxide Emissions: Evidence from Republic of Korea," Sustainability, MDPI, vol. 15(20), pages 1-15, October.
    15. Marc Audi & Marc Poulin & Khalil Ahmad & Amjad Ali, 2025. "Modeling Disaggregate Globalization to Carbon Emissions in BRICS: A Panel Quantile Regression Analysis," Sustainability, MDPI, vol. 17(6), pages 1-24, March.
    16. Halkos, George & Paizanos, Epameinondas, 2014. "Exploring the effect of economic growth and government expenditure on the environment," MPRA Paper 56084, University Library of Munich, Germany.
    17. Galinato, Gregmar I. & Islam, Asif, 2017. "The challenge of addressing consumption pollutants with fiscal policy," Environment and Development Economics, Cambridge University Press, vol. 22(5), pages 624-647, October.
    18. 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.
    19. Omodero Cordelia Onyinyechi, 2023. "Fiscal and Monetary Measures in Achieving Green Ecology: Evidence from Nigeria," Folia Oeconomica Stetinensia, Sciendo, vol. 23(2), pages 311-330, December.
    20. Wanfang Xiong & Yan Han & M. James C. Crabbe & Xiao-Guang Yue, 2020. "Fiscal Expenditures on Science and Technology and Environmental Pollution: Evidence from China," IJERPH, MDPI, vol. 17(23), pages 1-20, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    Statistics

    Access and download statistics

    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:spr:jknowl:v:16:y:2025:i:2:d:10.1007_s13132-024-02267-3. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.