Revisiting the determinants of carbon emissions for Turkey: the role of construction sector

Abstract

This study intends to consider the link among carbon dioxide (CO2) emissions, real GDP, energy usage, trade, financial development, and construction sector activities in Turkey within the Environmental Kuznets Curve (EKC) framework by employing an autoregressive distributed lag (ARDL) bounds test procedure. The analysis includes the period of 1970-2015 in keeping with available data. The findings of the study show that an increase in construction sector activities plays a positive role in CO2 emissions. The results also argue that CO2 emissions have risen statistically significantly with real GDP and energy usage increases. Furthermore, trade openness positively contributes to carbon emissions, while financial development does not explain environmental pollution in the long term. The study also reveals that the EKC hypothesis holds for Turkey both in the long term and short term. The long-run findings of the study are supported through robustness analysis by applying the dynamic ordinary least square (DOLS), the fully modified ordinary least square (FMOLS), and the canonical cointegrating regression (CCR) methods. The study suggests that the government should take action against environmental deterioration with efficient policies that save energy and reduce emissions regarding the construction and residential sectors' activities, such as providing financial support and tax cuts for relevant companies.