Effects of Fiscal and Monetary Policies, Energy Consumption and Economic Growth on CO2 Emissions in the Turkish Economy: Nonlinear Bootstrapping NARDL and Nonlinear Causality Methods

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 Tur...

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Published inSustainability Vol. 15; no. 13; p. 10463
Main Authors Bildirici, Melike, Genç, Sema Yılmaz, Ersin, Özgür Ömer
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.07.2023
Subjects
Carbon dioxide
Causality
Climate change
Decentralization
Econometrics
Economic activity
Economic development
Economic growth
Economic policy
Economics
Efficiency
Emissions
Energy consumption
Environmental degradation
Environmental impact
Environmental policy
Environmental quality
Fiscal policy
Fossil fuels
GDP
Gross Domestic Product
Literature reviews
Methods
Monetary policy
Recessions
Renewable resources
Sustainability
Sustainable development
Variables
United States > US
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Summary: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.
ISSN:2071-1050
2071-1050
DOI:10.3390/su151310463