The Impact of Financial Development, GDP and Energy Consumption on the Environmental Pollution in Iran (ARDL Approach)

Financial development may reduce environmental pollution through facilitating access to higher technology, and it may lead to environment degradation by increasing industrial activities. In this paper we investigate the impact of financial development, GDP and Energy Consumption on environmental pollution in Iran from 1971-2008 using ARDL procedure. The results reveal a positive impact of financial development in the short and long –term, it means that financial development in Iran has not lead to access environmentally friendly technology. Also in the long run GDP, Energy Consumption and trade liberalization have significant impact on co2Emission. By eliminating the variable of Energy Consumption the elasticities are increased. Moreover, the findings confirm the existence of an EKC in Iran in short and long-term.