The effect of financial crises on air pollutant emissions: an assessment of the short vs. medium-term effects

Pacca, Lucia, Antonarakis, Alexander, Schröder, Patrick and Antoniades, Andreas (2020) The effect of financial crises on air pollutant emissions: an assessment of the short vs. medium-term effects. Science of the Total Environment, 698. p. 133614. ISSN 0048-9697

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Abstract

This paper empirically investigates the impact of financial crises on air pollutant emissions (CO2, SO2, NOx and PM2.5). A panel data approach is used, including 419 financial crisis episodes in >150 countries over the period 1970–2014. The short- and medium-term effects of crises are estimated, using a GMM specification (for short-term) and the estimation of impulse response functions (for medium-term). Results show that in the short-term, as a consequence financial crises, emissions decrease for all gases except for PM2.5. In particular, emissions of CO2, SO2 and NOx decrease by 2.6, 1.8, and 1.7% respectively. However, in the medium-term, financial crises cause insignificant effect on emissions, or in some cases even lead to a 1–2% increase, cancelling out the initial benefit. Our analysis also shows that the effect of crises is larger in high income and upper-middle income countries. Moreover, recent crises had a larger short-term impact on air pollutants than crises in previous decades. Our results suggest that the beneficial impact of financial crises on air quality is short-lived. To preserve this beneficial impact in the long run and avert new negative post-crisis emission patterns and dynamics, policy responses to financial crises should encompass tighter environmental regulations and green investments.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Strategy and Marketing
Research Centres and Groups: climate@sussex
Subjects: G Geography. Anthropology. Recreation > GB Physical geography
G Geography. Anthropology. Recreation > GE Environmental Sciences > GE300 Environmental management
H Social Sciences > HB Economic theory. Demography > HB0071 Economics as a science. Relation to other subjects
H Social Sciences > HC Economic history and conditions > HC0079 Special topics, A-Z > HC0079.E5 Environmental policy and economic development. Sustainable development Including environmental economics
Depositing User: Alexander Antonarakis
Date Deposited: 20 Sep 2019 15:43
Last Modified: 04 Nov 2019 11:14
URI: http://sro.sussex.ac.uk/id/eprint/86048

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Project NameSussex Project NumberFunderFunder Ref
Assessing the impact of Debt on Forest Cover, Air Pollution and Resource Efficiency1916SSRPUnset