Economic growth, environmental degradation and business cycles in Eswatini

Andrew Phiri

No 1901, Working Papers from Department of Economics, Nelson Mandela University

Abstract: This study investigates the impact of the business cycle on the Environmental Kuznets Curve (EKC) for the Eswatini Kingdom over the period 1970 – 2014. To this end, we employ the nonlinear autoregressive distributive lag (NARDL) model to capture the long-run and short-run cointegration effects between economic activity and greenhouse gas (GHG) emissions over different phases of the business cycle. Our findings reveal that economic activity only degrades the environment during upswing of the economic cycle whilst this relationship is insignificant during downswing of the cycle. We specifically compute a value of $3.57 worth of output been gained at the cost of a metric unit of emissions during economic expansionary phases. Altogether, these results insinuate much needed government intervention in the market for emissions via environmental tax reforms (ETR) which should be designed with countercyclical bias towards upswing the business cycle.

Keywords: Economic growth, Greenhouse gas (GHG) emissions, Environmental Kuznets Curve, Business cycles, Nonlinear autoregressive distributive lag (NARDL) model, Eswatini; Sub-Saharan Africa (SSA). (search for similar items in EconPapers)
JEL-codes: C13 C32 C51 K32 Q43 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2019-01, Revised 2019-01
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Economic growth, environmental degradation and business cycles in Eswatini (2019)
Working Paper: Economic growth, Environmental degradation and business cycles in Eswatini (2019)
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