Issue |
E3S Web Conf.
Volume 317, 2021
The 6th International Conference on Energy, Environment, Epidemiology, and Information System (ICENIS 2021)
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Article Number | 01068 | |
Number of page(s) | 8 | |
Section | Culture and Environment | |
DOI | https://doi.org/10.1051/e3sconf/202131701068 | |
Published online | 05 November 2021 |
Does Inflation Reduce Air Pollution? Evidence from Indonesia
1 Faculty of Economics, Universitas Negeri Semarang, Semarang, Indonesia
2 Faculty of Economics, Universitas Negeri Jakarta, Jakarta, Indonesia
* Corresponding author: andryan@mail.unnes.ac.id
Inflation could likely cause devastating impacts where high inflation can harmful economic and social circumstances. However, only limited studies try to find the impact of inflation on the quality of air. The aim of this study is to investigate the empirical linkage between inflation and air pollution in Indonesia covering the period of 1981 until 2017 by using an error correction model (ECM) methodological approach. The result of study suggests that in the short run, higher inflation is causing the lower level of air pollution. Similarly, in the long run, higher inflation is also affecting the lower level of air pollution. While there are a lot of negative impacts of inflation in Indonesia, the finding in this study indicates a positive impact of inflation in Indonesia, which is higher inflation can reduce the air pollution. The results seem contradict with the target of central bank of Indonesia to have a low but positive rate of inflation. Based on the findings, the study suggests the policymakers in Indonesia to support a robust role of inflation stability in achieving targets related to the reduction of air pollution.
© The Authors, published by EDP Sciences, 2021
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