OPEC countries face a dual challenge of sustaining oil-led economic growth while mitigating environmental degradation. This study investigates the dynamic effects of monetary and fiscal policies on per capita carbon dioxide (CO2) emissions in 15 OPEC member states over the period 1995–2024. Utilizing a Panel Autoregressive Distributed Lag (Panel ARDL) framework, the Pooled Mean Group (PMG) estimator was applied after confirming variables’ stationarity, cross-sectional dependence, and panel cointegration. The short-run empirical findings reveal that macroeconomic policy instruments do not exert a statistically significant impact on carbon emissions; instead, short-term emissions are primarily driven by structural factors such as population growth and per capita income. In the long run, however, government expenditures (fiscal expansion) and exchange rates exhibit a significant mitigating effect on CO2emissions. Conversely, monetary expansion (money supply) and population size act as key drivers of environmental degradation in the long run. Additionally, the Environmental Kuznets Curve (EKC) hypothesis is validated for the sampled countries. The error correction term (ECM=-0.12) indicates a relatively slow adjustment rate toward the long-run equilibrium. Policy implications suggest that OPEC policymakers should align monetary and fiscal frameworks by implementing green budgeting, directing bank credit toward low-carbon projects, and regulating liquidity to facilitate the energy transition.
Sadeghian,E , Totonchi,J and Alavirad,A . (2026). The Impact of Monetary and Fiscal Policies on Air Pollution Levels in OPEC Member Countries. (e48652). Monetary & Financial Economics, (), e48652 doi: 10.22067/mfe.2026.98648.1683
MLA
Sadeghian,E , , Totonchi,J , and Alavirad,A . "The Impact of Monetary and Fiscal Policies on Air Pollution Levels in OPEC Member Countries" .e48652 , Monetary & Financial Economics, , , 2026, e48652. doi: 10.22067/mfe.2026.98648.1683
HARVARD
Sadeghian E, Totonchi J, Alavirad A. (2026). 'The Impact of Monetary and Fiscal Policies on Air Pollution Levels in OPEC Member Countries', Monetary & Financial Economics, (), e48652. doi: 10.22067/mfe.2026.98648.1683
CHICAGO
E Sadeghian, J Totonchi and A Alavirad, "The Impact of Monetary and Fiscal Policies on Air Pollution Levels in OPEC Member Countries," Monetary & Financial Economics, (2026): e48652, doi: 10.22067/mfe.2026.98648.1683
VANCOUVER
Sadeghian E, Totonchi J, Alavirad A. The Impact of Monetary and Fiscal Policies on Air Pollution Levels in OPEC Member Countries. Monetary & Financial Economics. 2026;():e48652 (In Persian). doi: 10.22067/mfe.2026.98648.1683
