The asymmetric effects of oil price changes on environmental pollution: evidence from the top ten carbon emitters
2020
Ullah, Sana | Chishti, Muhammad Zubair | Majeed, Muhammad Tariq
The basic purpose of this study is to scrutinize the asymmetric effect of oil price changes on environmental pollution in Canada, China, India, Iran, Germany, Japan, Russia, South Korea, Saudi Arabia, and the USA. The study uses time series annual data of selected courtiers from 1981 to 2018 and applies non-linear ARDL (NARDL) model to examine the long- and short-run asymmetries. The results show that positive shocks in diesel prices in the USA, India, Japan, Germany, South Korea, Iran, and Canada, while negative shocks in China and India reduce carbon emissions in the long run. However, an increase in gasoline prices in Russia and Iran while the decrease in gasoline prices in the USA, Russia, Japan, and Canada decreases in carbon emissions in the long run. Asymmetric findings also suggest that positive and negative changes in oil prices affect carbon emissions differently in China, the USA, India, Russia, Japan, Germany, South Korea, Iran, Saudi Arabia, and Canada in the short and long run. However, sign and magnitude of positive and negative shocks of oil prices are more important in environmental economics polices. Therefore, based on sign and magnitude, more taxation of fossil fuel and clean energy subsidies are recommended for the top carbon-emitting economies.
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