ScienceGuy

The study investigates the impact of monetary policy on CO2 emissions while controlling for income, trade, foreign direct investment (FDI) and accounting for structural breaks using annual data from 1971 to 2014. By utilizing the extended environmental Kuznets curve (EKC) framework and dynamic ARDL simulations, the results reveal that the Kuznets curve is a long-run phenomenon for India, not a short run. Moreover, interest rates are identified to possess a significantly positive relation with emissions in the short as well as long run. This indicates the sub-optimality of the present monetary policy for sustainable growth. Hence, it suggests incorporating environmental impacts into the central bank’s framework. Additionally, trade is found to be inelastic and weakly beneficial for the environment, while FDI is elastic and significantly detrimental. The latter evidence supports Pollution Haven Hypothesis. Further, following Itkonen (Itkonen, Energy, 2012) arguments, the study demonstrat...

Generally, some of the developed countries (mainly the US) claim that it is the developing world responsible for the current state of emissions and they should be the one held responsible and not the developed countries.

Amongst top CO2 emitters (1960-2010) by absolute emissions stand these economies:

The study explores the effect of trade and FDI contributed to CO2 emissions in China from 1981-2014. It finds that trade, mainly exports, and FDI had significantly led to higher emissions. Thereby it finds evidence in support of Pollution Haven Hypothesis.