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Do environmental taxes impede economic growth? A comparison between China and India

Author

Listed:
  • Muhammad Ishfaq Ahmad

    (Lahore Business School, 1-km Raiwind Road Off, Defence Road Lahore, Lahore, 54000, Punjab, Pakistan)

  • Ramiz Ur Rehman

    (Lahore Business School, The University of Lahore, Pakistan)

  • Muhammad Akram Naseem

    (The University of Lahore, 1-km Raiwind Road Off, Defence Road Lahore, Lahore, 54000, Punjab, Pakistan)

  • Rizwan Ali

    (The University of Lahore, 1-km Raiwind Road Off, Defence Road Lahore, Lahore, 54000, Punjab, Pakistan)

Abstract

The aim of this study is to determine the direction of causality between economic growth and environmentally oriented taxes between two countries, China and India. Further, it investigates which country is leading in environmental protection race by imposing and collecting more environmental taxes. The novel element of this study is that this is the first study comparing two economic rivals by environment taxes. The dataset consists of environmental taxes and its proportion to GDP and total taxes, transportation taxes, GDP and adjusted net savings for China and India. The data are taken from the organization of Economic Cooperation and Development (OECD) data bank from 2009 to 2018. The study utilizes the Granger causality to test the causal relationship between environment taxes and economic growth. The findings of the study posit that the imposition of environmental taxes will not only make the big economies environmental friendly but with sustainable economic growth.

Suggested Citation

  • Muhammad Ishfaq Ahmad & Ramiz Ur Rehman & Muhammad Akram Naseem & Rizwan Ali, 2021. "Do environmental taxes impede economic growth? A comparison between China and India," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 8(04), pages 1-9, December.
    • Handle: RePEc:wsi:ijfexx:v:08:y:2021:i:04:n:s2424786320500231
    DOI: 10.1142/S2424786320500231
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