Institutional Quality, Employment, Trade Openness on Environment (Co2) Nexus From Top Co2 Producing Countries; Panel ARDL Approach

Abstract

This study aims to examine the impact of Institutional quality, Employment, and trade openness on the environment (CO2 emission in metric tonnes) for the period between 2002 and 2021, using data from the top ten CO2-producing nations (China, United States, India, Russia, Japan, Germany, Iran, South Korea, Saudi Arabia, and Indonesia). We employ the panel-based Auto Regressive Distributive Lags (ARDL) model that includes a unit root test to examine the stationarity properties of the data. The findings shows that the Employment and Trade openness are at level of first difference and other Institutional Quality was on level which shows the mixed stream results. The long run equation regressors indicated that the environment (CO2) has been affected due to all other predictors trade openness, employment labor and institutional quality.  After finding substantial cointegration, the long-term and short-term ARDL coefficients for the models are estimated. The model has negative and statistically significant lagged Error Correction Term indicating an extremely stable long-run link between attributes. In long run & short run the panel ARDL results shows that Institutional Quality has the significant impact on CO2 emissions as and when institutional quality improves CO2 emission diminishes and the other variables Employment and Trade openness has significant impact on CO2 environment. The results are more important for policy makers in setting up policies to protect environment.