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Using Bootstrap Fourier Granger Causality Test in Quantiles to Re-examine Pollution Haven/Halo Hypotheses in China and G3 Countries

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  • Chang Tsangyao
  • Sheng-Tung Chen
  • Mei-Chih Wang

Abstract

We re-examine the Pollution Haven and Pollution Halo hypotheses (PHEH and PHALH) using a quantile-based Bootstrap Fourier Granger causality test, a method adept at identifying non-linear structural breaks. Our study encompasses data from China and the G3 countries (Japan, the UK, and the USA) spanning the period from 1980 to 2020. Our empirical findings reveal that data from the USA corroborates the PHEH, suggesting a trend where increased foreign direct investment (FDI) aligns with higher environmental degradation. In contrast, data from China affirms the PHALH, indicating that FDI contributes to improved environmental standards. However, data from Japan and the UK do not conclusively support either hypothesis. These results have significant implications for governmental policy formulation in China and the G3 countries, particularly in shaping FDI policies that align with environmental sustainability goals.JEL: Q56, F18, C32, F21, Q54

Suggested Citation

  • Chang Tsangyao & Sheng-Tung Chen & Mei-Chih Wang, 0. "Using Bootstrap Fourier Granger Causality Test in Quantiles to Re-examine Pollution Haven/Halo Hypotheses in China and G3 Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 0(0), pages 1-22.
    • Handle: RePEc:voj:journl:v:0:y:0:i:0:p:1-22:id:1719
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    File URL: https://panoeconomicus.org/index.php/jorunal/article/view/1719/822
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    Keywords

    Pollution haven/pollution halo hypotheses ; Bootstrap fourier Granger causality ; Quantile ; FDI ; CO2 emissions ; China ; G3 countries ; Environment;
    All these keywords.

    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
    • F18 - International Economics - - Trade - - - Trade and Environment
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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