Do Green Taxes and Renewables Energy Matter for Environmental Quality in OECD Countries? Evidence from Monte Carlo Simulations

The governments of the Organization for Economic Cooperation and Development (OECD) countries have issued several strict policies to improve environmental quality. Thereby, analysis of factors that affect environmental matters in OECD members might provide helpful lessons for emerging countries. The study aims to investigate the role of tax and renewable energy consumption on environmental issues prevention in OECD countries from 1994 to 2018. By applying Monte Carlo simulations, the findings reveal that renewable energy consumption is a good policy, while tax regulation only has a medium negative impact on environmental quality. The study also finds that regulatory quality does not support environmental quality improvement in these countries. Based on findings, the study suggests some helpful implications for administrators in planning ecological protection policies and encouraging renewable energy consumption.