Do Urbanization and Financial Development in Emerging 7 Countries Increase Co2 Emissions? ― Empirical Research on Fourier Ardl Model

Abstract

This paper collects data on urbanization, financial development, economic growth, and CO2 emissions over the past 50 years in seven emerging countries: Brazil, China, India, Indonesia, Mexico, Russia, and Turkey, and empirically test their correlations. In the cointegration test, we found there is a significant correlation between the variables in China and Indonesia, indicating that there is a significant short-term and long-term positive causality between the urbanization rate and CO2 emissions; and financial development has a positive effect.Then, using the Granger causality test and the long-term causality test, it is found that in the long-term causality, economic growth and urbanization are the main factors affecting the increase of CO2 emissions; from the perspective of short-term causality, urbanization is the cause of the increase in CO2 emissions major factor. In the long-term causality test, the data of China and Indonesia both concluded that economic growth and urbanization are the main factors affecting the increase in CO2 emissions. In the short-term causality test, except for India and Russia, urbanization is the main factor affecting the increase of CO2 emissions.Finally, based on the empirical conclusions, relevant policy recommendations are drawn: the 7 emerging countries should pay more attention to sustainable development in terms of economy and finance; actively play the role of relevant financial departments in reducing CO2 emissions; pay attention to the low-carbon development of urbanization in multiple dimensions, and effectively promote CO2 emission reduction.

Keywords: Economic Growth, Financial Development, CO2 Emissions, Urbanization, Emerging 7 Countries, Fourier ARDL Model