Impact of FDI, crude oil price and economic growth on CO2 emission in India: - symmetric and asymmetric analysis through ARDL and non -linear ARDL approach

Sreenu, Nenavath

Impact of FDI, crude oil price and economic growth on CO2 emission in India: - symmetric and asymmetric analysis through ARDL and non -linear ARDL approach

2022

Sreenu, Nenavath

The paper examines the impact of macroeconomic variables on CO2 emissions, very few research studies are available to estimate the asymmetric impact and causality. Because of the significance of asymmetries, this paper examines the asymmetric impact of economic growth, crude oil use, and FDI inflows on CO2 emissions in the India wherein COP (Crude oil price) is comprised as the extra variable. The implicate aggressive growth of selected variables over the period 1990–2020 is also assessed. This study uses the methodology ARDL and NARDL model to determine the macroeconomics variable's effects on CO2 emission over the period 1990-2020. Additionally, also applied the EKC (Environmental Kuznets Curve) hypothesis with an application of ARDL and NARDL model. With help of the ARDL and NARDL model, the study shows the results that a rise in economic growth would reduce CO2 (carbon dioxide) emissions while a decrease in economic growth would raise CO2 emissions which indicates an inverted U-shaped Curved relationship between economic growth and CO2 emissions. The positive and negative shockwaves in COP (crude oil prices) have a satisfactory and substantial impact on CO2 emissions as well. Besides, the crude oil consumption with positive shockwave confirmations has a positive and substantial impact on CO2 emission. In addition, the results of FDI inflows support the pollution heaven hypothesis. In light of these outcomes, this paper also recommended policy implications and future research, the policy implications are where the descending flow of FDI allows limited space to India in FDI selection; however, the existence of emission merging and implementation of carbon pricing may facilitate India in achieving its environmental targets.

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