The Effect of Monetary and Fiscal Policies on the Ecological Footprint in Iran

Document Type : Research Article

Authors

1 M.A. Student in Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.

2 Assistant Professor, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran

3 Assistant Professor, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.

Abstract

One of the most important challenges of societies in the last few decades is the destructive and repeated human activities to destroy the environment. The ecological footprint is the latest index measuring the extent of individuals’ influence and engagement in addressing the issue of climate change as well as their negative impact on the environment. The economic policies adopted by societies have a significant effect on the process of ecological footprint. Monetary and Fiscal Policies are among the most important policies that, in addition to affecting the productive and economic activities of society, also affect the environment. Therefore, the main purpose of this study is to investigate the effect of monetary and Fiscal policies on the ecological footprint in Iran during the period from 1980 to 2021 and using the structural vector autoregression method. “Liquidity and the government’s final consumption expenditures have been employed as monetary and fiscal policy tools, while economic growth, urbanization, and foreign direct investment have been utilized as control variables.” The results of this research show that foreign direct investment and urbanization have a negative and significant impact on the ecological footprint. Also, economic growth, monetary policy, Fiscal policy and the dependent variable itself have a positive and significant effect on the ecological footprint and lead to an increase in the ecological footprint during the mentioned time period. On the other hand, fiscal policy impulses in the long term have resulted in a rise in environmental degradation in Iran. The results of variance analysis in the 10th period show that monetary policy explains 6.70% and Fiscal policy 24.06% of changes in the dependent variable.

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Main Subjects

References

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Journal of Applied Economics Studies in Iran
Volume 13, Issue 50
August 2024
Pages 109-136

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