Evaluating the COVID-19 response policy's impact on carbon dioxide emissions in the top four CO2 emission countries

Abstract

PurposeThe stringency policy and economic support policy in response to and to address the coronavirus disease 2019 have become a significant concern since the end of 2019. The motivation that led to this study is that, the selection of the stringency policy and the economic support policy appear to have brought about the opposite effects of the environmental costs of carbon dioxide emissions. The study's objective is to examine the contradictory impacts of these stringency and economic support policies on carbon dioxide emissions.Design/methodology/approachThis study applies panel data for the top four countries responsible for carbon dioxide emission, namely China, the United States of America, India and Russia. A fully modified ordinary least squares estimator and dynamic ordinary least squares estimator are employed to determine the long-run parameters.FindingsThe results indicate that the effect of reduced carbon dioxide emissions due to a one-unit increase in the stringency policy is greater than the effect of increased carbon dioxide emissions caused by a one-unit increase in the economic support policy. Hence, if the two policies are implemented simultaneously, a positive net effect on environmental costs will be gained.Research limitations/implicationsThe study investigates in a general scope, the impact these response policies have on the environment. Future researchers may enhance the research on environmental impact in different sectors due to the implementation of both policies to enrich the analytical perspective.Practical implicationsThe results have provided implications for policymakers to emphasize more on stringency-oriented policies while giving economic support to the low-income or unemployed households in order to reduce carbon dioxide emissions.Originality/valueDespite the foreseen effects of the stringency policy and economic support policy, there has hardly been any studies that have explored empirically the nexus between both policies with carbon dioxide emissions in one empirical model. Furthermore, the paper uses the high-frequency data in determining the contradictory impacts of stringency policy and economic support policy on CO2 emissions.