Examining the Impact of Environmental Taxation, Economic Growth, and Political Instability on Sustainability

Syed Irfan Haider Gillani, Amjad Ali and Marc Audi

MPRA Paper from University Library of Munich, Germany

Abstract: Sustainable development is the most challenging issue facing the whole world. It includes multiple dimensions like economic, social, and environmental. The current study explores the determinants of sustainability in developing countries by incorporating the role of environmental taxes, economic growth, renewable energy, and political stability. The study used 21 developing countries from 1994 to 2023 to find the impact of these macroeconomic variables on greenhouse gas emissions. The generalized method of moments and penal least squares with fixed effects model have been used to find robust empirical evidence. The empirical findings indicate that environmental taxes have a significant positive impact on environmental sustainability, while renewable energy, political stability, and economic growth have a significant negative impact on environmental sustainability. The study also demonstrates the moderating role of environmental taxes on renewable energy and political stability. It indicates that environmental taxes have no statistical support to build a statement about the moderating role. The study suggests that policy makers to take immediate action to revise taxation policies by incorporating the current challenges faced by the environment. Renewable energy sources should be promoted to make them accessible. If possible, taxes on accessories of renewable energy setups should immediately be removed.

Keywords: Environment Taxes; Renewable Energy; Sustainable Growth; Greenhouse Gas Emissions; Developing Countries; Political Stability (search for similar items in EconPapers)
JEL-codes: H23 Q3 Q4 (search for similar items in EconPapers)
Date: 2026
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