Paper Title
The Impact of Financial Development, FDI and Urbanization on CO2 emissions in Bangladesh: A Linear and Nonlinear ARDL Model
Abstract
The study examines the linear and nonlinear associations between CO2 emission, real GDP, energy consumption, financial development, foreign direct investment, trade openness, urbanization, agriculture, and industry as potential contributing factors of CO2 emissions in case of Bangladesh for the duration of 1974-2018. The study uses two cointegration approaches such as linear, nonlinear ARDL methods to ascertain the affiliation between the variables and the bound test results approve the long term linkage between the variables. The empirical findings disclose that the crucial determining factors of CO2 emissions in Bangladesh are economic growth, energy consumption, financial development, FDI, urbanization and industry. This study also finds the proof of the EKC hypothesis in Bangladesh. The results of NARDL estimations show that energy consumption, trade openness and agriculture influence CO2 emissions in an asymmetric way in the long run. More importantly, increases in trade openness drive down CO2 emissions; in contrast, the size of carbon emissions amplifies in case of lowering trade openness. The outcomes of both linear and nonlinear ARDL models show that energy consumption, FDI,financial development, and urbanization increase CO2 emissions, while trade openness decreases it.
Keywords - CO2 Emission, Energy Consumption, FDI, Linear and nonlinear ARDL model.