Date of Award
Dr. Ficawoyi Donou-Adonsou
This paper first examines the relationship between digitalization and CO 2 emissions to test the inverted U-shaped relationship predicted by the Environmental Kuznets Hypothesis. The results using the fixed effects, two-stage least squares, and generalized method of moments estimation coincide with this inverted U-shaped relationship suggesting that increases in digitalization increase CO 2 emissions up to a certain threshold of digitalization and then decrease it. An interaction term with financial development was then included in the model to determine the role that it plays in this inverted U-shaped relationship. Overall, results indicated that there is no strong evidence that financial development plays a role in the relationship between digitalization and CO 2 emissions. Since the nature of the relationship depends on the level of digital development of a country, this suggests that countries should have different policies when attempting to reduce emissions as they continue to digitalize.
Larick, Morgan, "The relationship between digitalization, CO 2 emissions, and financial development" (2023). Senior Honors Projects. 155.
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