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Institutions and carbon emissions: an investigation employing STIRPAT and machine learning methods

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  • Arusha Cooray

    (James Cook University)

  • Ibrahim Özmen

    (Selcuk University)

Abstract

We employ an extended Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT) model combined with the environmental Kuznets curve and machine learning algorithms, including ridge and lasso regression, to investigate the impact of institutions on carbon emissions in a sample of 22 European Union countries over 2002 to 2020. Splitting the sample into two: those with weak and strong institutions, we find that the results differ between the two groups. Our results suggest that changes in institutional quality have a limited impact on carbon emissions. Government effectiveness leads to an increase in emissions in the European Union countries with stronger institutions, whereas voice and accountability lead to a fall in emissions. In the group with weaker institutions, political stability and the control of corruption reduce carbon emissions. Our findings indicate that variables such as population density, urbanization and energy consumption are more important determinants of carbon emissions in the European Union compared to institutional governance. The results suggest the need for coordinated and consistent policies that are aligned with climate targets for the European Union as a whole.

Suggested Citation

  • Arusha Cooray & Ibrahim Özmen, 2024. "Institutions and carbon emissions: an investigation employing STIRPAT and machine learning methods," Empirical Economics, Springer, vol. 67(3), pages 1015-1044, September.
  • Handle: RePEc:spr:empeco:v:67:y:2024:i:3:d:10.1007_s00181-024-02579-y
    DOI: 10.1007/s00181-024-02579-y
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    More about this item

    Keywords

    Institutions; Carbon emissions; STIRPAT; Machine learning; Ridge regression; Lasso regression;
    All these keywords.

    JEL classification:

    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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