Open AccessDo government expenditure and financial development impede environmental degradation in Venezuela?
Author(s) -
M Alotaish Mohammed Saud,
Ping Guo,
Ihtisham ul Haq,
Guoqin Pan,
Alam Khan
Publication year - 2019
Publication title -
plos one
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.99
H-Index - 332
ISSN - 1932-6203
DOI - 10.1371/journal.pone.0210255
Subject(s) - environmental degradation , kuznets curve , sustainable development , government (linguistics) , context (archaeology) , government expenditure , economics , environmental quality , natural resource economics , development economics , public economics , economic growth , business , macroeconomics , public finance , geography , ecology , biology , linguistics , philosophy , archaeology
Environmental degradation is causing global warming, which is of the utmost concern to both physical and social scientists. A number of potential determinants of environmental degradation are analysed in the literature. This study examines the role of government expenditure and financial development in environmental degradation in the context of the environmental Kuznets curve (EKC) hypothesis for the Venezuelan economy. Time series data have been analysed for this purpose. The long-term relationship between the variables in this study is established through a bounds test in the presence of an unknown structural break. The results of this study confirm the EKC hypothesis. It is found that energy use is harming the quality of the environment not only in the long run but also in the short run. This study finds a positive impact of government expenditure on environmental degradation, which indicates that the Venezuelan government is not taking its expenditure for a sustainable environment into account. Moreover, this study finds that financial development is hindering environmental degradation. This means that financial institutions in Venezuela can help to develop the concept of sustainable energy in the country and the Venezuelan government can reduce carbon emissions through financial development.