Does Inflation Affect Emissions Reduction?

Inflation and sustainable development are two important factors in the economic development of most countries. This study will use empirical analysis to examine how macroeconomic variables, including the money supply (M2), economic growth rate (GRR), trade openness (TO), and inflation (INF), related to CO2 (the environment variable) in Vietnam from 1995 to 2022. The effect of detecting emitted CO2 can be considered both in the short and long term. This study uses the research analysis method of the self-healing distributed slow (ARDL) model. Several independent variations are proposed in the model, including M2 supply, economic growth rate, trade expansion rate, and issuance rate, to evaluate the influence of increasing emission waste. Research results show that the impacts are statistically significant in the short and long term. Finally, the study also offers some policy tips for Vietnam to adjust economic variables to achieve a better level of development and move towards sustainable economic development.