Nexus between Environmental Tax, Economic Growth, Energy Consumption, and Carbon Dioxide Emissions: Evidence from China, Finland, and Malaysia Based on a Panel-ARDL Approach

Based on the environmental Kuznets curve theory (EKC) and the double-dividend hypothesis of environmental tax, this paper aims to examine the relationship between environmental tax, economic growth, energy consumption, and carbon dioxide emissions in China, Finland, and Malaysia from 1985 to 2014 using panel autoregressive distribution lag (ARDL) models. This paper discovers an N-shaped relationship between the volume of carbon dioxide emissions and the value of the gross domestic product. Furthermore, this study confirms that the double-dividend effect of environmental tax exists in all three countries in the long run. Overall, this study argues that evidence from Finland and Malaysia on environmental taxes that help the country to save energy and reduce carbon dioxide emissions can provide a reference for China and other developing countries.

Automated summary

This study examined the relationship between environmental tax, economic growth, energy consumption, and carbon dioxide emissions using panel ARDL models in China, Finland, and Malaysia. It found an N-shaped relationship between carbon dioxide emissions and GDP, and confirmed the existence of the double dividend effect of environmental tax in the long run. The evidence from Finland and Malaysia on environmental taxes could provide valuable references for other developing countries, including China.