Can economic and financial development curb CO2 emissions in Qatar?

Abstract

This study investigates the impacts of economic and financial development on carbon emissions in Qatar between 1975 and 2018 by analyzing the results of the ARDL and VECM tests. We do so by considering two model specifications, Model 1 and 2, considering CO2 emission is a dependent variable. In Model 1, economic growth and its square are considered as independent variables to test the basic Environmental Kuznets Curve (EKC) hypothesis. The results provide evidence to confirm the EKC hypothesis for Qatar. In Model 2, various economic and financial variables are specified as regressors, and all the independent variables have a statistically significant impact on CO2 emissions at a 1% level. The coefficient of real income per capita implies that an increase in income will increase carbon emissions by 72%. On the other hand, financial development's carbon elasticity indicates that an increase in financial development will decrease CO2 emissions by 32%. The carbon elasticity of foreign trade signifies that an increase in trade will decrease CO2 emissions by 33%.