Beschreibung:
Being a threat to sustainable development, pollution has attracted the attention of major policymakers and researchers. This explains the growing interest shown by researchers in the energy economics debate, which is not without inconsistencies. Our objectives in this paper therefore are, to investigate the impact of lending rate on pollution, and to determine whether the relationship between them is linear. Standard Econometric techniques, Dynamic OLS, and Markov Regime-Switching method were applied to analyze annual data of the United States of America. We contribute to the literature by being the first, to the best of our knowledge, to undertake such a study. The results seem to suggest that firstly, Lending rate Granger causes pollution, and secondly, the impact of Lending rate on pollution depends on prevailing economic and socio-political conditions. Policymakers can rely on the lending interest rate, together with prevailing economic and socio-political conditions, for purposes of initiating actions that will help reduce pollution.