The impact of financial crises on the environment in developing countries

Joao Jalles

Annals of Finance, 2020, vol. 16, issue 2, No 5, 306 pages

Abstract: Abstract This paper evaluates empirically the effect of financial crises on several types of pollutant emissions. We focus on a sample of 55 developing countries from 1980 until 2012 and rely on the local projection method to plot impulse response functions. Our results show that financial crises lead to a fall in CO2 emissions. Moreover, systemic crises increase consumption-based emissions, which suggests that this type of crises encourages the consumption of goods with an inferior environmental quality. A country hit by a sovereign debt crisis, experiences an increase in emissions stemming from energy related activities or industrial processes. During bad times, financial crises positively affect both methane and nitrous oxide emissions. Finally, in countries under fiscal retrenchment, a financial crisis leads to a negative response of CO2 emissions.

Keywords: Greenhouse emissions; CO2; Local projection; Impulse response function; Recessions; Fiscal contractions (search for similar items in EconPapers)
JEL-codes: E32 E6 F65 G01 O44 Q54 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10436-019-00356-x

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