Nexus between Environmental Tax, Economic Growth, Energy Consumption, and Carbon Dioxide Emissions: Evidence from China, Finland, and Malaysia Based on a Panel-ARDL Approach

ABSTRACT

Based on the environmental Kuznets curve theory (EKC) and the double-dividend hypothesis of environmental tax, this paper aims to examine the relationship between environmental tax, economic growth, energy consumption, and carbon dioxide emissions in China, Finland, and Malaysia from 1985 to 2014 using panel autoregressive distribution lag (ARDL) models. This paper discovers an N-shaped relationship between the volume of carbon dioxide emissions and the value of the gross domestic product. Furthermore, this study confirms that the double-dividend effect of environmental tax exists in all three countries in the long run. Overall, this study argues that evidence from Finland and Malaysia on environmental taxes that help the country to save energy and reduce carbon dioxide emissions can provide a reference for China and other developing countries.

KEY WORDS:

• carbon dioxide emissions
• double-dividend theory
• environmental Kuznets curve
• environmental taxes

JEL:

• E62

Additional information

Funding

The authors are grateful for support received from the National Social Science Fund of China [17BGL051].