The Relationship Between Environmental Taxes, Carbon Emissions and Economic Growth: An Analysis of OECD Countries

Abstract

The study examined the relationship between environmental taxes, economic growth, and carbon emissions by considering 34 OECD countries from 1995 to 2020. First, unit root tests were carried out to determine whether there is a relationship between carbon emissions, economic growth and environmental taxes. Then, the Dumitrescu Panel Granger causality test was applied. The panel quantile regression method was used depending on the relationship that emerged. According to the results, it has been determined that there is a positive relationship between environmental taxes and economic growth and a negative relationship between carbon emissions and economic growth. In addition, it can be said that while the effect of environmental taxes on economic growth is high in developing countries, this effect decreases in developed countries.