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Effectiveness of environmental policies on carbon emissions: A panel threshold analysis

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  • Akbulut Hale

    (Department of Public Finance, Hacettepe University, Beytepe Campus, Ankara, Turkey)

Abstract

The aim of this study is to test the possible non-linear effect of environmental policy stringency on carbon emissions and thus make policy recommendations for emission reduction. For this purpose data for the period 1995–2015 for selected emerging countries were used. According to the findings obtained from fixed-effects panel threshold regressions environmental policy stringency has no significant effect on the relationship between gross domestic product per capita and carbon dioxide emissions. However, it has statistically significant effect if the share of the service sector and the foreign direct investment are taken as regime-dependent variables. Accordingly, in the high policy stringency regime an increase in the share of the service sector and the foreign direct investment reduce emission levels. In the case of using market-based environmental regulations the threshold effect faced by foreign direct investment is much more pronounced. In order to reduce carbon emissions it is recommended to increase environmental policy stringency, especially in market-based tools.

Suggested Citation

  • Akbulut Hale, 2022. "Effectiveness of environmental policies on carbon emissions: A panel threshold analysis," Economics and Business Review, Sciendo, vol. 8(3), pages 82-108, October.
    • Handle: RePEc:vrs:ecobur:v:8:y:2022:i:3:p:82-108:n:6
    DOI: 10.18559/ebr.2022.3.5
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    References listed on IDEAS

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    More about this item

    Keywords

    carbon emissions; environmental policy stringency; threshold models;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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