The Role of Economic and Environmental Policies on Preventing Air Pollution

The purpose of the article is to investigate the role of economic and environmental policies on preventing air pollution using the Dynamic Stochastic General Equilibrium (DSGE) model during the period of 1990-2019. Based on the results of the model, the economic policy shock causes a sudden increase in economic growth and consumption and then their decrease; However, the economic policy shock increases air pollution. The shock of environmental policies, firstly, increases consumption and economic growth and then decreases them. Investment also decreases as a result of the shock of environmental policies. Based on the results of variance analysis, the role of economic policies for the country's economic situation and creating air pollution is greater than environmental policies. The role of environmental policies in reducing air pollution is less than the role of economic policies in increasing air pollution. It is suggested that when the government increases its expenditures, it imposes green taxes or carbon emission taxes at a lower rate than the increase in government expenditures so that the economic growth of the country will continue to be maintained along with the reduction of environmental pollution.