Does fiscal decentralization curb the ecological footprint in pakistan?

Abstract

This paper offers a new indulgence to the present literature by integrating the role of fiscal decentralization (FD) in affecting ecological footprint (EF). So, this study considered the effect of FD on EF in the existence of energy consumption (EC), technological innovation (TI), gross domestic product (GDP), and trade openness (TOP) from 1990 to 2018 in Pakistan. We employ econometric methods like Bayer & Hanck cointegration, fully modified ordinary least squares, dynamic ordinary least squares, and canonical cointegration regression for empirical analysis. Moreover, the frequency domain causality test is used to conclude the causal impact of FD, EC, TI, GDP, and TOP on EF. The regression results disclose that EC, GDP, and TOP boost EF in Pakistan; however, FD and TI promote the sustainability of the environment by reducing EF. Besides, the frequency causality outcomes indicate that FD, EC, TI, GDP, and TOP have insinuations for EF in the long term. As a policy recommendation, this research suggests that Pakistan could successfully integrate strategies to increase ecological quality by allowing the lower level of government to utilize eco-friendly technological innovations.