Environmental Policy Instruments and Greenhouse Gas Emissions: VAR Analysis
The paper examines the interaction between the
environmental taxation, size of government spending on
environmental protection and greenhouse gas emissions and gross
inland energy consumption. The aim is to analyze the effects of
environmental taxation and government spending on environmental
protection as an environmental policy instruments on greenhouse gas
emissions and gross inland energy consumption in the EU15. The
empirical study is performed using a VAR approach with the
application of aggregated data of EU15 over the period 1995 to 2012.
The results provide the evidence that the reactions of greenhouse gas
emission and gross inland energy consumption to the shocks of
environmental policy instruments are strong, mainly in the short term
and decay to zero after about 8 years. Further, the reactions of the
environmental policy instruments to the shocks of greenhouse gas
emission and gross inland energy consumption are also strong in the
short term, however with the deferred effects. In addition, the results
show that government spending on environmental protection together
with gross inland energy consumption has stronger effect on
greenhouse gas emissions than environmental taxes in EU15 over the
examined period.
[1] OECD. Evaluating Economic Instruments for Environmental Policy,
Paris, OECD, 1997, pp. 141. ISBN:978-92-6415-360-8.
[2] K. Kubátová, Daňová teorie a politika. Wolters Kluwer, Praha, 2010, pp.
275. ISBN: 978-80-7357-574-8.
[3] A. C. Pigou, The Economics of Welfare. London: Macmillan, 1920.
Available on http://www.econlib.org/library/NPDBooks/
Pigou/pgEW0.html.
[4] J. P. Hines, “Excise Taxes,” University of Michigan and NBER.
Working papers series. Product Number WP 2007-2, 2007. Available
on: http://www.bus.umich.edu/otpr/WP2007-2.pdf.
[5] European Energy Exchange. Auctions by the transitional common
Auction platform. Report June 2014. European Commissions, 2014.
Available on http://ec.europa.eu/clima/policies/ets/cap/auctioning/
docs/cap_report_201406_en.pdf.
[6] V. Solilová, D. Nerudová, “Overall approach of the EU in the question
of emissions: EU emissions trading system and CO2 taxation,” Procedia
Economics and Finance, pp. 616-625. published online, September
2014.
[7] W. Baumol, W. E. Oates, 1988. The Theory of Environmental Policy.
Cambridge University Press, 1988, pp. 299. ISBN 978-05-2131-112-0.
[8] Eurostat. Environmental statistics and accounts in Europe. Publications
Office of the European Union. Luxembourg, 2010, pp. 346. ISBN 978-
92-79-15701-1.
[9] Eurostat, “Environmental protection expenditure in Europe”. Online data
code: env_ac_exp2 and env_ac_exp1r2, for last available year 2011.
[10] C. Bohringer, T. Rutherford, “Carbon Taxes with Exemptions in an
Open Economy: A General Equilibrium Analysis of the German Tax
Initiative,” Journal of Environmental Economics and Management; Vol.
32, pp. 189-203, 1997.
[11] J. Cuervo, Ved P. Gandhi, “Carbon taxes: Their macroeconomic effects
and prospects for global adoption,” EconPapers, Revista Desarrollo Y
Sociedad, 1999.
[12] C. A. Sims, “Macroeconomics and reality,” Econometrica, vol. 48., No.
1, pp. 1-48, 1980.
[13] F. Canova, M. Ciccarelli, “Panel vector autoregressive models a
survey,” Working paper series, No 1507, January 2013, European
Central Bank. Available on: https://www.ecb.europa.eu/pub/research/
authors/profiles/matteo-ciccarelli.en.html.
[14] G. Dökmen, “Environmental tax and economic growth: a panel VAR
analysis,” 2012. Available on: http://iibf.erciyes.edu.tr/dergi/sayi40/
ERUJFEAS_Jun2012_43to65.pdf.
[15] M. Watson, “Vector autoregressions and cointegration,” In Handbook of
Econometrics, Volume IV. R. F. Engle and D. McFadden (eds). Elsevier
Science Ltd., Amsterdam. Available on: http://pages.stern.nyu.edu/
~dbackus/Identification/VARs/Watson_VARs_handbook_94.pdf.
[16] H. Lütkepohl, Introduction to multiple time series analysis. Springer-
Verlag: New York, 1991, pp. 1-545. ISBN 0-387-53194-7.
[17] H. Lütkepohl, New introduction to multiple time series analysis.
Springer: Berlin, 2005, pp. 764. ISBN 978-3-540-27752-1.
[18] D. Waggoner, Tao A. Zha, “Conditional forecasts in Dynamic
Multivariate Models,” Review of Economics and Statistics, vol. 81(4),
pp. 639-651.
[19] V. Ramey, M. Shapiro, “Costly capital reallocation and the effects of
government spending,” Carnegie-Rochester Conference Series on Public
Policy, vol. 48, pp. 145-194, 1998.
[20] G. Elliott, T. J. Rothenberg, J. H. Stock, “Efficient tests for an
autoregressive unit root,” Econometrica, vol. 64., pp. 813-836, 1996.
[21] P. S. Sephton, “Response surface estimates of the KPSS stationarity
test,” Economics Letters, vol. 47., pp. 255-261, 1995.
[1] OECD. Evaluating Economic Instruments for Environmental Policy,
Paris, OECD, 1997, pp. 141. ISBN:978-92-6415-360-8.
[2] K. Kubátová, Daňová teorie a politika. Wolters Kluwer, Praha, 2010, pp.
275. ISBN: 978-80-7357-574-8.
[3] A. C. Pigou, The Economics of Welfare. London: Macmillan, 1920.
Available on http://www.econlib.org/library/NPDBooks/
Pigou/pgEW0.html.
[4] J. P. Hines, “Excise Taxes,” University of Michigan and NBER.
Working papers series. Product Number WP 2007-2, 2007. Available
on: http://www.bus.umich.edu/otpr/WP2007-2.pdf.
[5] European Energy Exchange. Auctions by the transitional common
Auction platform. Report June 2014. European Commissions, 2014.
Available on http://ec.europa.eu/clima/policies/ets/cap/auctioning/
docs/cap_report_201406_en.pdf.
[6] V. Solilová, D. Nerudová, “Overall approach of the EU in the question
of emissions: EU emissions trading system and CO2 taxation,” Procedia
Economics and Finance, pp. 616-625. published online, September
2014.
[7] W. Baumol, W. E. Oates, 1988. The Theory of Environmental Policy.
Cambridge University Press, 1988, pp. 299. ISBN 978-05-2131-112-0.
[8] Eurostat. Environmental statistics and accounts in Europe. Publications
Office of the European Union. Luxembourg, 2010, pp. 346. ISBN 978-
92-79-15701-1.
[9] Eurostat, “Environmental protection expenditure in Europe”. Online data
code: env_ac_exp2 and env_ac_exp1r2, for last available year 2011.
[10] C. Bohringer, T. Rutherford, “Carbon Taxes with Exemptions in an
Open Economy: A General Equilibrium Analysis of the German Tax
Initiative,” Journal of Environmental Economics and Management; Vol.
32, pp. 189-203, 1997.
[11] J. Cuervo, Ved P. Gandhi, “Carbon taxes: Their macroeconomic effects
and prospects for global adoption,” EconPapers, Revista Desarrollo Y
Sociedad, 1999.
[12] C. A. Sims, “Macroeconomics and reality,” Econometrica, vol. 48., No.
1, pp. 1-48, 1980.
[13] F. Canova, M. Ciccarelli, “Panel vector autoregressive models a
survey,” Working paper series, No 1507, January 2013, European
Central Bank. Available on: https://www.ecb.europa.eu/pub/research/
authors/profiles/matteo-ciccarelli.en.html.
[14] G. Dökmen, “Environmental tax and economic growth: a panel VAR
analysis,” 2012. Available on: http://iibf.erciyes.edu.tr/dergi/sayi40/
ERUJFEAS_Jun2012_43to65.pdf.
[15] M. Watson, “Vector autoregressions and cointegration,” In Handbook of
Econometrics, Volume IV. R. F. Engle and D. McFadden (eds). Elsevier
Science Ltd., Amsterdam. Available on: http://pages.stern.nyu.edu/
~dbackus/Identification/VARs/Watson_VARs_handbook_94.pdf.
[16] H. Lütkepohl, Introduction to multiple time series analysis. Springer-
Verlag: New York, 1991, pp. 1-545. ISBN 0-387-53194-7.
[17] H. Lütkepohl, New introduction to multiple time series analysis.
Springer: Berlin, 2005, pp. 764. ISBN 978-3-540-27752-1.
[18] D. Waggoner, Tao A. Zha, “Conditional forecasts in Dynamic
Multivariate Models,” Review of Economics and Statistics, vol. 81(4),
pp. 639-651.
[19] V. Ramey, M. Shapiro, “Costly capital reallocation and the effects of
government spending,” Carnegie-Rochester Conference Series on Public
Policy, vol. 48, pp. 145-194, 1998.
[20] G. Elliott, T. J. Rothenberg, J. H. Stock, “Efficient tests for an
autoregressive unit root,” Econometrica, vol. 64., pp. 813-836, 1996.
[21] P. S. Sephton, “Response surface estimates of the KPSS stationarity
test,” Economics Letters, vol. 47., pp. 255-261, 1995.
@article{"International Journal of Business, Human and Social Sciences:68814", author = "Veronika Solilová and Danuše Nerudová", title = "Environmental Policy Instruments and Greenhouse Gas Emissions: VAR Analysis", abstract = "The paper examines the interaction between the
environmental taxation, size of government spending on
environmental protection and greenhouse gas emissions and gross
inland energy consumption. The aim is to analyze the effects of
environmental taxation and government spending on environmental
protection as an environmental policy instruments on greenhouse gas
emissions and gross inland energy consumption in the EU15. The
empirical study is performed using a VAR approach with the
application of aggregated data of EU15 over the period 1995 to 2012.
The results provide the evidence that the reactions of greenhouse gas
emission and gross inland energy consumption to the shocks of
environmental policy instruments are strong, mainly in the short term
and decay to zero after about 8 years. Further, the reactions of the
environmental policy instruments to the shocks of greenhouse gas
emission and gross inland energy consumption are also strong in the
short term, however with the deferred effects. In addition, the results
show that government spending on environmental protection together
with gross inland energy consumption has stronger effect on
greenhouse gas emissions than environmental taxes in EU15 over the
examined period.
", keywords = "VAR analysis, greenhouse gas emissions, environmental taxation, government spending.", volume = "9", number = "1", pages = "165-5", }
