Dimas Setiawan*

Faculty of Economics & Business, University of Jember 

M. Abd. Nasir

Faculty of Economics & Business, University of Jember 

DOI: https://doi.org/10.19184/bisma.v20i2.60049

ABSTRACT 

This study examines the validity of the Environmental Phillips Curve (EPC) hypothesis in the ASEAN-5 region by analyzing the dynamic impacts of monetary, fiscal, and trade policies on carbon dioxide (CO2) emissions. Utilizing panel data from 2000 to 2024, the empirical estimation employs a first-differenced Fixed Effect Model (FEM) with Gross Domestic Product (GDP) explicitly included as a baseline control variable. This methodological approach isolates pure macroeconomic shocks, systematically addresses level-data non-stationarity, and mitigates omitted-variable bias. The results reveal a consistently significant negative relationship between unemployment and CO2 emissions across all three policy frameworks. This outcome firmly confirms a structural short-term trade-off, demonstrating that job creation efforts actively stimulate carbon emissions due to a persistent regional reliance on carbon-intensive industries. Furthermore, fiscal policy, primarily driven by energy subsidies and physical infrastructure expansion, is identified as the leading catalyst for environmental degradation. The study concludes that regional policymakers must transition from fragmented growth agendas toward an integrated green macroeconomic policy mix, effectively aligning labor absorption targets with global sustainability mandates. 

Keywords: CO2, Environmental Phillips Curve, monetary policy, fiscal policy, trade policy.