Carbon emissions, environmental distortions, and impact on growth

The climate changes over the past few decades are a significant threat to the future of humanity. In this regard, in current years, consumption-based carbon emanations have dominated research on environmental issues and international trade. This study examines how carbon emission influences the economic growth of the top five polluted economies of the world. To get an estimate on an empirical level, the study uses a Panel Autoregressive Distributed Lag (PARDL) approach. After a shock, the system shifts towards a long-run equilibrium, as the estimated results show that the ECM value is negative and significant. Empirics show that energy consumption and GDP are positively and significantly associated with CO2 emissions in both the long and short run. In addition, the GDP2 effect indicates the Kuznets curve (EKC) effect in the top five polluted countries. Industrial production is positively linked with CO2 emissions in the short term but negatively correlated and statistically insignificant in a long time. Finally, it is recommended that policymakers focus on reducing pollution, especially in high‑carbon emissions, and in other countries, countries that prerequisite to cutting the use of coal and oil energy could help reduce CO2 emissions to protect the environment. In addition, these countries must switch to using clean energy such as natural gas.

© 2023 Elsevier B.V. All rights reserved.