Panel Cointegration Analysis of Total Environmental Taxes and Economic Growth in EU Countries

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Published Jun 2, 2021
DOI https://doi.org/10.28934/ea.21.54.1.pp92-103

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Vera Mirović
University of Novi Sad, Faculty of Economics in Subotica, Department for Finance and Accounting, Subotica, Serbia
Branimir Kalaš
University of Novi Sad, Faculty of Economics in Subotica, Department for Finance and Accounting, Subotica, Serbia
Nada Milenković
University of Novi Sad, Faculty of Economics in Subotica, Department for Finance and Accounting, Subotica, Serbia

Abstract

This paper examines the relationship between total environmental taxes and economic growth for twenty-eight EU countries from 1994 to 2018. The aim of this research is to evaluate the long-run relationship between these variables based on panel data analysis. The analysis includes panel unit root test, panel cointegration test, panel ordinary least squares, panel dynamic ordinary least squares, as well as, fully modified ordinary least squares models. The results reveal long-run cointegrated relationship between total environmental taxes and economic growth in selected countries. Likewise, there is a significant relation running from total environmental taxes to economic growth measured by gross domestic product rate. Empirical findings confirm that revenue of environmental taxes have a positive and statistically significant effect on economic growth measured by gross domestic product rate in the long-run.

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Vol 54 No 1 (2021): Economic Analysis: Applied Research in Emerging Markets
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Articles
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