Impact of Green Environmental Policies and Green Taxes on Carbon Emissions: Panel Threshold Regression Analysis

Abstract

This study analyses the possible non-linear effects of green (environmental) policy stringency and green fiscal (market-based) policy stringency on carbon emissions, and suggestions are given to reduce carbon emissions. In panel threshold regression findings, while no threshold effect for green (environmental) policy stringency is observed in the relationship between GDPs per capita and carbon emissions, when urban population, service sector and environmental technologies patents are used as regime-dependent variables, a threshold effect is observed for green (environmental) policy stringency. In this context, in the high green (environmental) policy stringency regime, the increase in urban population and environmental technologies patents reduce carbon emissions, while the rise in the share of the service sector increases carbon emissions. However, when green fiscal (market-based) policies that use taxes to combat environmental pollution are used as the threshold, no threshold effect is observed for the variables urban population, environmental technologies patents, service sector and GDP per capita.