Taxation and corporate finance in Ghana: how do they affect environmental quality?

Figures & data

Table 1. Measurement of variables.

Variable	Description	Measurement
Dependent variable
LCO2E	Emission of carbon dioxide	CO2 emissions metric tons per capita
Independent variables
TX	Taxation	Taxes less subsidies on products (current US$)
CF	Corporate finance	Domestic credit to the private sector (% of GDP)
Control variables
GE	Government size	General government final consumption expenditure (% of GDP)
UR	Urbanization	Urban population (% of total population)
TR	Trade openness	Trade (% of GDP)

Source: Author’s construction.

Table 2. Variables descriptive statistics and correlation.

	L CO2E	LCF	LGE	LUR	LTX	LTR
		Statistics
Mean	−1.181408	2.016084	2.316534	3.692741	19.93321	3.904332
Median	−1.256474	2.169929	2.332650	3.701703	20.16574	4.117198
Maximum	−0.452935	2.894348	2.728386	4.037898	22.33022	4.754008
Minimum	−1.820955	0.589092	1.868895	3.373278	15.77683	1.843774
Std. Dev.	0.354758	0.707397	0.219188	0.219706	1.705400	0.631598
		Correlation
LCO2E	1.000000
LCF	0.744038	1.000000
LGE	−0.484528	−0.103214	1.000000
LUR	0.762460	0.799542	−0.393542	1.000000
LTX	0.810536	0.750898	−0.256997	0.733219	1.000000
LTR	0.430132	0.824405	0.115051	0.751904	0.491435	1.000000

Source: Author’s construction.

Table 3. Unit root results.

Variables	At levels T-statistics (break point period)			At first difference T-statistics (break point period)
	ADF	PP	ZA	ADF	PP	ZA
LCO2E	−0.404	−0.029	−3.864 (1984)	−8.478***	−8.321***	−7.100*** (1993)
LCF	−1.030	−1.159	−4.073 (1996)	−6.437***	−6.425***	−8.479*** (1984)
LGE	−3.088**	−3.180**	−4.751** (1992)			−5.822*** (1984)
LUR	−0.851	0.467	−5.580*** (1985)	−0.397	−1.347
LTX	−2.385	−2.440		−3.973***	−6.094***
LTR	−1.789	−1.944	−3.255 (1986)	−5.868***	−5.718***	−7.968*** (1983)

***Significant at 1%; **significant at 5%.

Source: Author’s estimation.

Table 4. Cointegration results.

Significance (%)	F-statistic = 5.681535
	Lower bound (%)	Upper bound
10	10	2.26
5	5	2.62
2.5	2.5	2.96
1	1	3.41

Source: Author’s estimation.

Table 5. ARDL short run results (dependent variable = LCO₂E).

Variable	Coefficient	Std. error	t-Stat	Prob.
Independent variables
D(LCF)	−0.323825	0.075006	−4.317313	0.0002
D(LTX)	0.100823	0.025444	3.962557	0.0004
Control variables
D(LGE)	−0.134045	0.086651	−1.546967	0.1327
D(LUR)	31.235714	9.244757	3.378749	0.0021
D(LTR)	−0.364861	0.096187	−3.793236	0.0007
Diadnostic variable
ECT(-1)	−0.273782	0.091159	−3.003340	0.0055

Source: Author’s estimation.

Table 6. ARDL long run results (dependent variable = L CO₂E).

Series	ARDL
	Coefficient	Std. error	t-Stat
Independent variables
LCF	0.712***	0.159	4.465
LTX	0.382***	0.056	6.821
Control variables
LGE	−1.066***	0.306	3.483
LUBS	−2.410***	0.549	4.389
LTO	−0.419**	0.162	2.586
C	1.324	1.427	0.927

***Significant at 1%; **Significant at 5%.

Source: Author’s estimation.

Figure 1. CUSUM results of model stability. Source: Author’s estimation.

Figure 2. CUSUM of squares results of stability. Source: Author’s estimation.

Table 7. Post regression diagnostic results.

Diagnostic	Test	Statistic	Probability
Heteroskedasticity Test	ARCH	F-stat.= 2.44	0.13
Serial correlation	Breusch-Godfrey	F-stat.= 1.62	0.23
Normality	Jarque-Bera	JB = 3.51	0.17
Stability	Ramsey RESET	F-stat= 0.63	0.53

Source: Author’s estimation.

Table 8. FMOLS and CCR long run results (dependent variable = LCO₂E).

Series	FMOLS		CCR
	Coefficient	Std. error	Coefficient	Std. error
Independent variables
LCF	0.339***	0.092	0.331***	0.078
LTX	0.063**	0.025	0.062**	0.024
Control variables
LGE	−0.332**	0.161	−0.344	0.173
LUBS	0.533	0.289	0.542	0.294
LTO	−0.261**	0.098	−0.251**	0.111
C	−3.303***	0.991	−3.321***	0.971
Adj-R^2	0.83			0.83

***Significant at 1%; **significant at 5%.

Source: Author’s estimation.

Table 9. Results of variance decomposition analysis.

Period	S.E	LCO2E	LCF	LGE	LUR	LTX	LTR
1	0.093696	100.0000	0.000000	0.000000	0.000000	0.000000	0.000000
5	0.133884	81.01835	6.674802	4.160977	1.574811	4.714464	1.856594
10	0.140140	75.05331	8.443218	3.981062	3.448986	6.281062	2.792363
15	0.145076	70.24914	10.56916	3.898949	3.326390	7.876747	4.079617
20	0.150970	65.04802	13.17515	3.677245	3.390445	9.548045	5.161091
25	0.156454	60.66827	14.94140	3.451690	4.785744	10.37912	5.773773
30	0.161337	57.11047	15.46732	3.248472	8.011438	10.34662	5.815686
35	0.166117	53.88188	14.88334	3.103595	12.79832	9.811787	5.521078
40	0.172399	50.03506	14.01552	3.030640	17.94252	9.569193	5.407062
45	0.182513	44.71152	14.18819	3.008086	21.48894	10.52944	6.073813
50	0.198539	37.95775	16.36320	2.981458	21.92313	13.02565	7.748816

Source: Author’s estimation.

Data availability statement

Data was obtained from World Bank (2023) World Development Indicators. https://databank.worldbank.org/source/world-development-indicators#