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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Impact of Financial Development on the Environmental Quality in Iran
Author(s)
Hadi Esmaeilpour Moghadam, Mohammad Reza Lotfalipour
Full-Text PDF
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DOI:10.17265/1537-1506/2014.09.001
Affiliation(s)
Hadi Esmaeilpour Moghadam, M.A. Student in Economics, Ferdowsi University of Mashhad, Iran.
Mohammad Reza Lotfalipour, professor, Ferdowsi University of Mashhad, Iran.
ABSTRACT
In recent decades, undesirable environmental changes, such as global warming and greenhouse gases emission, have raised worldwide concerns. In order to achieve higher growth rate, environmental problems emerged from economic activities have turned into a controversial issue. The aim of this study is to investigate the effect of financial development on environmental quality in Iran. For this purpose, the statistical data over the period from 1970 to 2011 were used. Also by using the Auto Regression Model Distributed Lag (ARDL), short-term and long-term relationships among the variables of model were estimated and analyzed. The results show that financial development accelerates the degradation of the environment; however, the increase in trade openness reduces the damage to environment in Iran. Error correction coefficient shows that in each period, 53% of imbalances would be justified and will approach their long-run procedure. Structural stability tests show that the estimated coefficients were stable over the period.
KEYWORDS
financial development, trade, Auto Regression Model Distributed Lag (ARDL)
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