Vol (15), Issue (2), 2022

Investigating the Spillover Effects of the US Interest Rate on CO2 Emissions. A Case of a Developing Country

Fakhr e Alam Afridi, Bushra Ayaz, Yousaf Khan & Fazaila Shad

National University of Modern Language, Peshawar

Islamia College Peshawar

Any change in US economic policies will have a big effect on international markets due to the size ofthe US economy. Therefore, this study's goal is to look at how Pakistan's CO2 emissions are impactedby the U.S. interest rate. The study uses the ARDL testing approach over the period 1985-2014. Theresults suggested that policymakers should pay more attention to environmental pollution bysupporting investment and projects in renewable resources with low interest-rate. The findingssuggest that to respond to any external shocks policymakers should keep promoting investments inlow- CO2 emission technologies. This study findings further evidence that the U.S interest rate mayaffect the increase in environmental pollution in emerging countries like Pakistan through energyconsumption, economic growth, and local interest rate channels.
Keywords: CO2 emissions, energy consumption, bootstrap ARDL, Pakistan




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