Assessing the Impact of Easy and Restrictive Macroeconomic Policies on Ecological Footprint Index in Asian Economies

In recent decades, all the literature on the mental problems of the environmental economy and their causes calls for immediate action when it comes to environmental contamination. In this setting, this paper expands the literature with developing a new model connecting macroeconomic policies, gross domestic per capita consumption, fossil fuel consumption, consumption of renewable energy, and Ecological Footprint (ECFP) for the Asian economies from 1996 to 2020. The results ofWesterlund cointegrating tests confirm the long-term association of the variables. The two-step system GMM estimators discover the following key results. First, easy fiscal policy exacerbates the negative consequences of environmental quality. However, restrictive fiscal policy is an effective measure aimed at reducing the adverse effects of environmental quality. Secondly, both easy and contracting monetary policies are deteriorating and improving the quality of the environment, respectively. Third, overall consumer spending and fossil fuel spending are positively associated with pollution. Fourth, renewable power improves air quality by disrupting environmental quality. The causative affiliation among the variables was also confirmed through the application of the Granger causality test. The article suggests some significant implications for authorities to develop effective policies and plans to improve environmental quality in line with current results