Abstract:

This study is an attempt to analyze the influences of foreign capital inflows, fiscal and monetary policy, energy use, and national income on climate change, measured by air temperature, in the ten countries from the Asia-Pacific region. Using panel data from 1990–2023, the most appropriate empirical methodologies, namely panel ARDL, DOLS, FMOLS and the panel Granger causality test, based on the nature of the data, are employed for empirical analysis. Empirical outcomes reveal that foreign capital inflows in the form of FDI have a climate mitigation impact, while foreign aid has a climate aggravating impact. Similarly, monetary policy through money supply has a climate mitigation impact, while fiscal policy through government spending has a climate aggravation impact. Both energy usage and national income have aggravating impacts on climate change in the region. These findings suggest that effective measures need to be taken by each national government to ensure climate change mitigation, which will ultimately impact the process of sustainable economic development.