Asymmetric and long-run impact of political stability on consumption-based carbon dioxide emissions in Finland: Evidence from nonlinear and Fourier-based approaches

The study investigates the asymmetric and long-run impact of political stability on consumption-based carbon dioxide (CCO₂) emissions in Finland. In this context, the study examines the impact of political stability, economic growth, renewable energy consumption, and trade openness; includes quarterly data between 1990/Q1 and 2019/Q4, and applies nonlinear and Fourier-based approaches. The empirical outcomes reveal that (i) there is a long-run cointegration between CCO₂ emissions and political stability as well as other controlling variables; (ii) positive changes in political stability have statistically significant impacts on CCO₂ emissions, whereas negative shocks in political stability are not statistically significant. Also, positive shocks are more powerful than negative shocks; (iii) positive shocks in economic growth have significantly increasing impacts; (iv) positive and negative shocks in renewable energy have decreasing impacts on CCO₂ emissions, while positive shocks are more powerful; (v) positive (negative) shocks in trade openness have decreasing (increasing) impacts on CCO₂ emissions. Overall, the empirical results highlight the role of political stability on CCO₂ emissions. Thus, consideration of political stability by policymakers of Finland in the policy development and implementation processes is highly recommended to achieve a carbon-neutrality target by 2035.