The trade-off between economic growth and environmental quality: does economic freedom asymmetric matter for Pakistan?

This empirical study investigates the dynamic effects of economic freedom on economic growth and air quality for Pakistan over the period 1990–2019. The ARDL results suggest that economic freedom and other variables do not have any visible impact on economic growth and pollution in the short-run. However, in the long-run, economic freedom significantly mitigates air pollution whereas inflation instability increases emissions. The NARDL results show that a partial sum of positive change in economic freedom is negatively linked with economic growth in the short term but has positive effect in the long term. However, the negative change in economic freedom has negative but insignificant impact on growth confirming asymmetric effects. The results for the pollution model show that a partial sum of positive change in economic freedom has positive impact on emissions both in the short and long-runs, whereas a negative change has no significant effect in the short-run and has negative impact in the long-run. Thus, economic freedom supports economic activities that, in turn, escalate emissions in the atmosphere.