Financial Stability, Energy Consumption, Economic Growth, and Environmental Quality: Fresh Evidences of Iran

Document Type : Scientific paper

Authors

1 Assistant professor, Department of Economics, Faculty of Economics and Administrative Sciences, babolsar, Iran

2 Assistant professor, Department of Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, babolsar, Iran

3 MA student of Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

Abstract

Despite the importance of the relationship between financial system stability, energy consumption, economic growth and Environmental quality in economic policies, in economics literature in the country has not been examined. For this purpose, for this purpose, in this study is an endeavor to examine the impact of financial stability, renewable and non- renewable energy consumption and economic growth on Environmental quality (co2 emission) in Iran.  Autoregressive distributed lag bounding test has been used to estimate the short run and long run relationship between these variables, in the framework of the multivariate time series model, over the period 1359-1395. Also, Toda-Yamamato causality is employed to investigating causality relationship between these variables. The results indicate that financial stability have no significant impact on environmental quality in Iran, while economic growth, population density and non-renewable have a negative and significant impact on environmental quality. In addition, the results show a positive and significant impact of renewable energy consumption on improving environmental quality in Iran. Also, the results support the environmental Kuznets curve (EKC) hypothesis during the underlying study period in Iran considering the variables of financial stability and energy consumption. According to the results, a set of financial, economic, demographic and energy supply policies is necessary to reduce the negative impacts of Environmental pollution by policymakers.

Highlights

-       Aghaei, M. (2016). " Investigation the causality relationship between energy consumption and economic growth in differentiation of energy carriers and economic sectors: application of ARDL Bounding Test". Quarterly Journal of Energy Economics, VOL.12, NO. 49. [in Persian]

-       Ambec, s. & P. Lanoie. "Does it Pay to be Green? A Systematic Overview", Academy of Management Perspectives. PP. 45-62, 2008.

-       Asgharpor, M., Behbodi, H., Khanghahi, R." The Effect of Economic and Financial Development Quality; An Empirical Analysis in Selected OPEC Continues", Quarterly Journal of Enviroment and Energy, VOL.2, NO. 6,  2012.[in Persian]

-       Capelle Blanchard, G., & Laguna, MA. "How Does the Stock Market Respond to Chemical Disasters"? Environ Econ Manage, 59(2):192–205, 2010.

-       Dasgupta, S., Laplante, B., & Mamingi, N. "Pollution and Capital Markets in Developing Countries", Journal of Environmental Economics and Management. 42 (3): 310-335, 2001.

-       Farzinvash, A.,SHiran, A.GH. "Explaining and Building the Financial Stability Index and Chek it out for Developing Countries", Economic Policy, NO. 2, 2011. [in Persian]

-       IPCC. (2001). "Climate Change the Scientific Basis", In: Technical Summary of the Working Group I Report New York.

-       Jalil, A., & Feridun, M. "The Impact of Growth, Energy and Financial Development on the Environment in China: A cointegration Analysis Energy Economics", 33: 284-291, 2011.

-       Kolstad, C.D., & Kraut Kreamer, J.A."Natural Resource Use and the Environment. Energy Economics," 3: 1219-65, 1993.

-       Lanoie, P., Laplante, B., & Roy, MCan. "Capital Markets Create Incentives for Pollution Control"? Ecological Economics, 26: 31-41, 1998.

-         Nadali, M. "Financial Stability and the Necessity of its Monitoring in the Space of Resistance Economy", Quarterly Trend, VOL. 22, NO. 71, 2015.[in Persian]

-       Pesaran, M., Y. shin, & R. Smith. "Bounds Testing Approaches to the Analysis of Level Relationships", Journal of Applied Economic, 16: 289-326, 2001.

-       Richard, P. "Financial Instability and CO2 Emissions", GREDI working paper NO. 10-20، University of Sherbrooke, 2010.

-       Samia, Nasreen. Sofia, Anwar., & Illhan Ozturk. "Financial Stability, Energy Consumption and quality Enviromental; Evidence from South Asian Economic", Renewable and Sustainable Energy Review, 1105-1122, 2017.

-        Shahbaz, M., Islam, F., & Butt, M.S. "Financial Development, Energy Consumption and CO2 Emissions: Evidence from ARDL Approach for Pakistan", Munich Personal Republic Archive Paper No. 30138, 2011.

-       Tamazian, A. & B. Rao. "Do Economic, Financial Developments Matter for Enviromental Degradation? Evidence from Transitional Economics". No. 37, pp. 137-145, 2010.

-       Tamazian, A., Pinero, C., Juan, C. & K. Vadlamannatia. "Dose Higher economic and financial development Environmental degradation: Evidence from BRIC countries". Energy Policy 37(1): 246- 253l, 2009.

-       Zhang, X.P., & Cheng, X.M. "Energy Consumption, Carbon Emissions and Economic Growth in China. Ecological Economics", 68: 2076-2712, 2009.

Keywords

References

-       Aghaei, M. (2016). " Investigation the causality relationship between energy consumption and economic growth in differentiation of energy carriers and economic sectors: application of ARDL Bounding Test". Quarterly Journal of Energy Economics, VOL.12, NO. 49. [in Persian]
-       Ambec, s. & P. Lanoie. "Does it Pay to be Green? A Systematic Overview", Academy of Management Perspectives. PP. 45-62, 2008.
-       Asgharpor, M., Behbodi, H., Khanghahi, R." The Effect of Economic and Financial Development Quality; An Empirical Analysis in Selected OPEC Continues", Quarterly Journal of Enviroment and Energy, VOL.2, NO. 6,  2012.[in Persian]
-       Capelle Blanchard, G., & Laguna, MA. "How Does the Stock Market Respond to Chemical Disasters"? Environ Econ Manage, 59(2):192–205, 2010.
-       Dasgupta, S., Laplante, B., & Mamingi, N. "Pollution and Capital Markets in Developing Countries", Journal of Environmental Economics and Management. 42 (3): 310-335, 2001.
-       Farzinvash, A.,SHiran, A.GH. "Explaining and Building the Financial Stability Index and Chek it out for Developing Countries", Economic Policy, NO. 2, 2011. [in Persian]
-       IPCC. (2001). "Climate Change the Scientific Basis", In: Technical Summary of the Working Group I Report New York.
-       Jalil, A., & Feridun, M. "The Impact of Growth, Energy and Financial Development on the Environment in China: A cointegration Analysis Energy Economics", 33: 284-291, 2011.
-       Kolstad, C.D., & Kraut Kreamer, J.A."Natural Resource Use and the Environment. Energy Economics," 3: 1219-65, 1993.
-       Lanoie, P., Laplante, B., & Roy, MCan. "Capital Markets Create Incentives for Pollution Control"? Ecological Economics, 26: 31-41, 1998.
-         Nadali, M. "Financial Stability and the Necessity of its Monitoring in the Space of Resistance Economy", Quarterly Trend, VOL. 22, NO. 71, 2015.[in Persian]
-       Pesaran, M., Y. shin, & R. Smith. "Bounds Testing Approaches to the Analysis of Level Relationships", Journal of Applied Economic, 16: 289-326, 2001.
-       Richard, P. "Financial Instability and CO2 Emissions", GREDI working paper NO. 10-20، University of Sherbrooke, 2010.
-       Samia, Nasreen. Sofia, Anwar., & Illhan Ozturk. "Financial Stability, Energy Consumption and quality Enviromental; Evidence from South Asian Economic", Renewable and Sustainable Energy Review, 1105-1122, 2017.
-        Shahbaz, M., Islam, F., & Butt, M.S. "Financial Development, Energy Consumption and CO2 Emissions: Evidence from ARDL Approach for Pakistan", Munich Personal Republic Archive Paper No. 30138, 2011.
-       Tamazian, A. & B. Rao. "Do Economic, Financial Developments Matter for Enviromental Degradation? Evidence from Transitional Economics". No. 37, pp. 137-145, 2010.
-       Tamazian, A., Pinero, C., Juan, C. & K. Vadlamannatia. "Dose Higher economic and financial development Environmental degradation: Evidence from BRIC countries". Energy Policy 37(1): 246- 253l, 2009.
-       Zhang, X.P., & Cheng, X.M. "Energy Consumption, Carbon Emissions and Economic Growth in China. Ecological Economics", 68: 2076-2712, 2009.
Macroeconomics Research Letter
Volume 13, Issue 26
November 2018
Pages 171-199

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History

  • Receive Date: 19 November 2018
  • Revise Date: 14 December 2018
  • Accept Date: 25 February 2019

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