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Title: Regional analysis of the relationship between CO2 emissions and financial development

Authors: Shiu-Wan Hung; Chiao-Ming Li; Ming-Yi Shen

Addresses: Department of Business Administration, National Central University, Add. No. 300 Jung-da Rd., Jung-li City, Taoyuan, Taiwan ' Department of Business Administration, National Central University, Add. No. 300 Jung-da Rd., Jung-li City, Taoyuan, Taiwan ' Department of Business Administration, National Central University, Add. No. 300 Jung-da Rd., Jung-li City, Taoyuan, Taiwan

Abstract: This study reappraises the relationships between financial development and carbon dioxide emissions by using 25 OECD countries during 1971-2007 as observations. It introduces the panel transition regression (PSTR) model. We found that strong evidence of the relationship between financial development and carbon dioxide emissions is non-linear and the trade-off correlation between these ratios and the carbon dioxide emissions. The carbon dioxide emissions will be different under the financial development threshold value and the control variables of energy consumption, GDP and GDP². What is more, the different financial development attributes produce completely different carbon dioxide emissions. In sum, the threshold effect of financial development will be an important index to control carbon dioxide emissions.

Keywords: energy consumption; non-linear; threshold effect; financial development; carbon dioxide emissions; PSTR model.

DOI: 10.1504/IJGEI.2018.092328

International Journal of Global Energy Issues, 2018 Vol.41 No.1/2/3/4, pp.2 - 13

Received: 06 Jul 2017
Accepted: 03 Feb 2018

Published online: 29 May 2018 *

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