The Link between green taxation and economic growth on CO2 emissions: Fresh evidence from Malaysia

Loganathan, Nanthakumar and Muhammad, Shahbaz and Taha, Roshaiza (2014) The Link between green taxation and economic growth on CO2 emissions: Fresh evidence from Malaysia. Renewable Energy and Sustainable Review , 38 (2014). pp. 1083-1091. ISSN 1364-0321

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This paper explores how carbon taxation and economic growth affect environment hazardsin Malaysia using time series data over the period 1974 to 2010. We applied cointegration and causality approaches to determine the long-term cointegration and direction of causal relationship between these variables. Based on the results, we found the cointegration relationship between the variables. Furthermore, we noted that although Kuznets' theory, i.e. inverted-U shaped curve between economic growth and CO2 emissions is valid for Malaysia, the carbon taxation policy is ineffective tocontrol CO2 emissions. The causality analysis revealed that there is a bidirectional relationship between carbon tax and CO2 emissions. Economic growth Granger causes CO2 emissions and carbon tax Granger causes economic growth. To enhance the awareness concerning pollution issues,governments should rely on alternative instruments that may give benefit to the taxpayers and reduce pollution, which is the pivotal issue to be tackled globally.

Item Type: Article
Additional Information: Renewable and Sustainable Reviews is a high impact journal (Q1) with 5.627 impact points
Keywords: economic growth, carbon tax, environment hazards
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
Faculty / Institute: Faculty of Economics & Management Sciences
Depositing User: Nanthakumar Loganathan
Date Deposited: 22 Sep 2014 09:02
Last Modified: 27 Apr 2015 03:11

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