Asymmetric determinants of CO2 emissions in China: do government size and economic size matter?

Abstract

CO₂ emission reduction is a long-term strategy for China to promote its government and economic size. However, this study examines the asymmetric impact of government size and economic size on CO₂ emissions in China. The study embraces the nonlinear ARDL framework of time series data analysis as proposed by Shin et al. (2014), which disentangles the positive and negative shocks to government size and economic size. We find that the response of CO₂ emissions to government size and economic size positive shocks differs from the negative shocks. Empirical outcomes revealed that a positive shock of government size exerts an insignificant positive on CO₂ emissions, while a negative shock of government size reduces CO₂ emissions. More specifically, a positive shock of economic size mitigates the CO₂ emissions of China in long run. Policymakers should redesign the energy and environment policies in the framework of government size and economy size.

Keywords: CO2 emissions; China; Economic size; Government size.