The effects of carbon inequality on economic growth: new evidence from MENA region

This study emphasizes the impact of carbon inequality on the economic growth of Middle East-North African (MENA) economies from 1995 to 2019. By employing the panel cross-sectionally augmented autoregressive distributed lags method (Chudik and Pesaran 2015), we explored the effect of the carbon footprint of top-income classes on economic performance in both the short and long term. The empirical results assume that carbon inequality indicators boost economic growth in the short and long run. In other words, economic growth may be slowed when carbon inequality is reduced. Our study has important implications for climate policy in the MENA region. In this context, relying on a carbon tax can increase business costs and reduce investment incentives leading to a decline in growth. Governments should adopt a more comprehensive approach incorporating other policy instruments such as nudging techniques, financial incentives, and public awareness campaigns. As a result, wealthy people will be encouraged to promote sustainable choices and behaviors that guarantee the progressive transition to low-carbon activities without hurting economic growth.