Economic growth and environmental degradation paradox in ASEAN: A simultaneous equation model with dynamic panel data approach


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Economic variables are dynamic in nature. This paper uses a simultaneous equation model to assess the complexity of the link between economic expansion and environmental deterioration in ASEAN. The study examines how CO2 emissions, economic growth, public health initiatives, and control factors interact using dynamic panel data from 2011 to 2020. The population, the amount of forested land, the use of renewable energy, foreign investment, the inflation rate, the total amount of foreign exchange reserves, and government health policies are just a few examples. In order to provide a reliable and accurate assessment of the long-term relationship, this study employs the generalized approach of the Arellano-Bond moment method. The econometric technique deals with the issues of nonstationary, endogeneity, cross-error correlation, and heteroscedasticity.
Additionally, the two stage least square (2SLS) method was used to assess the results’ robustness. According to the statistical results, there is a causal link between CO2 emissions and economic growth, and between CO2 emissions and energy consumption. Furthermore, according to the data, ASEAN CO2 emissions showed a monotonically growing relationship during the sample period. Policymakers may use these findings since they can aid in implementing economic measures to promote sustainable and ecologically friendly development.

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    • Figure 1. Simultaneous relationship model between variables
    • Table 1. Description of research variable data per ASEAN countries
    • Table 2. Problem identification with order conditions
    • Table 3. Panel unit root test results for research variables
    • Table 4. Hausman specification test results
    • Table 5. Estimation results of the regression coefficient with the dependent variable log(GDP)
    • Table 6. Estimation results of the regression coefficient with the dependent variable CO2 emissions
    • Table 7. Simultaneous significance test results
    • Table 8. Simultaneous significance test results
    • Table 9. Arellano-Bond test’s result
    • Table 10. Sargan test results
    • Conceptualization
      Supriyanto, Wiwiek Rabiatul Adawiyah, Arintoko
    • Data curation
    • Formal Analysis
    • Methodology
      Supriyanto, Wiwiek Rabiatul Adawiyah, Arintoko
    • Software
    • Writing – original draft
    • Project administration
      Wiwiek Rabiatul Adawiyah, Dijan Rahajuni
    • Writing – review & editing
      Wiwiek Rabiatul Adawiyah, Arintoko
    • Investigation
      Arintoko, Nunik Kadarwati
    • Supervision
      Dijan Rahajuni, Nunik Kadarwati
    • Validation
      Dijan Rahajuni, Nunik Kadarwati
    • Visualization
      Dijan Rahajuni
    • Resources
      Nunik Kadarwati