Abstract
The impact of financial openness on environmental degradation, mainly via carbon dioxide emissions, was investigated for a panel of 21 Latin American and Caribbean countries, throughout 35 years (from 1980 to 2014). An autoregressive distributed lag model was used to decompose the total effects of the variables into their short- and long-run components. The results show that financial openness, economic growth, and primary energy consumption increased environmental degradation, both in the short and long run, while renewable energy consumption decreased it. These findings suggest that policymakers should carry out financial reforms focused on sustainable development, as well as support renewable energy projects. Moreover, the results also lead one to believe that these countries’ economic growth strategies should be integrated with the carbon dioxide emissions regulation.
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Acknowledgements
The financial support of the NECE-Research Unit in Business Science and Economics, sponsored by the FCT-Portuguese Foundation for the Development of Science and Technology, Ministry of Science, Technology and Higher Education, project UID/GES/04630/2019, is acknowledged.
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NECE, R&D unit funded by the FCT—Portuguese Foundation for the Development of Science and Technology, Ministry of Science, Technology and Higher Education, project UID/GES/04630/2019.
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Koengkan, M., Santiago, R., Fuinhas, J.A. et al. Does financial openness cause the intensification of environmental degradation? New evidence from Latin American and Caribbean countries. Environ Econ Policy Stud 21, 507–532 (2019). https://doi.org/10.1007/s10018-019-00240-y
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DOI: https://doi.org/10.1007/s10018-019-00240-y