Does financial openness cause the intensification of environmental degradation? New evidence from Latin American and Caribbean countries

Matheus Koengkan (), Renato Santiago, José Alberto Fuinhas () and António Marques ()
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Renato Santiago: University of Beira Interior

Environmental Economics and Policy Studies, 2019, vol. 21, issue 4, No 2, 507-532

Abstract: 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.

Keywords: Environmental degradation; Ecological economics; Financial development; Energy economics (search for similar items in EconPapers)
JEL-codes: F64 G1 N56 O44 Q50 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10018-019-00240-y

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