THE IMPACT OF FOREIGN TRADE ON ENVIRONMENTAL SUSTAINABILITY: THE CASE OF IRAN

The aim of this study is to analyze the environmental impacts of foreign trade (imports and exports), energy consumption, and economic growth in the Iranian economy for the period 1965-2023 using the Fourier Augmented ARDL (FAARDL) method and the Fourier Toda-Yamamoto causality test. The findings reveal the existence of a cointegration relationship between the variables and point to a long-term equilibrium relationship. According to the FAARDL long-term coefficients, economic growth, exports, and energy consumption have an increasing effect on carbon dioxide emissions, while imports have a decreasing effect on emissions. According to the results of the Fourier Toda-Yamamoto causality test, unidirectional causality relationships were detected from economic growth to carbon dioxide emissions, from imports to carbon dioxide emissions, from energy consumption to carbon dioxide emissions, from economic growth to exports, from economic growth to energy consumption, and from energy consumption to exports. Furthermore, bidirectional causality relationships were found between imports and economic growth, exports and imports, and energy consumption and imports.