The Grim Cost of Economic Growth and Environmental Degradation: A Comprehensive Panel ARDL Study of Public Debt in the ASEAN-5 Countries

Round 1

Reviewer 1 Report

1. Justification of Model Choice: Provide a comprehensive justification for utilizing the one-gap model instead of the traditional two-gap model. Clearly articulate the reasons behind excluding foreign exchange gaps and discuss how this decision aligns with the specific context of the ASEAN-5 countries. Address potential concerns regarding the omission of trade openness variables and clarify how the analysis accounts for their impact on public debt.
2. Endogeneity Analysis: Conduct a rigorous discussion of endogeneity concerns between public debt and investment. Carefully discuss the potential endogeneity channels and present robustness checks that demonstrate the validity of the results in light of endogeneity concerns.
3. Expansion of Independent Variables: Enhance the analysis by including additional relevant independent variables beyond investment, such as government expenditure, fiscal policy indicators, and demographic factors. These variables can provide a more comprehensive understanding of the determinants of public debt in the ASEAN-5 countries and allow for a nuanced analysis of their impacts.
4. Detailed Methodological Explanation: Provide a more detailed and comprehensive explanation of the methodologies employed, particularly the panel ARDL approach combined with cointegration analysis. Clearly outline the steps taken, including model specification, lag length selection, and testing procedures. Discuss potential limitations and challenges associated with the methodologies used, such as sample size requirements and interpretation complexities. Justify the appropriateness of the chosen approach within the context of the research question.
5. Incorporation of Theoretical Literature: Address the theoretical literature on the relationship between public debt and investment, particularly focusing on the negative effects of public debt on investment. Discuss the debt overhang theory and the potential crowding-out effect of government investment on private investment. Integrate relevant theoretical frameworks into the analysis and demonstrate how the findings align or deviate from existing theoretical perspectives.
6. Comparative Analysis: Provide a comparative analysis with previous studies or existing literature that have examined the relationship between economic growth, environmental degradation, and public debt in the ASEAN-5 countries. Highlight similarities and differences in findings, methodologies, and contextual factors. This comparison will help contextualize the study's contributions and provide valuable insights into the existing body of knowledge.
7. Robustness Checks: Perform additional robustness checks to strengthen the validity of the findings. Consider altering the model specifications, testing alternative sets of independent variables, or employing different estimation techniques to assess the stability and consistency of the results. Discuss the outcomes of these robustness checks and their implications for the overall analysis.
8. Policy Implications: Discuss the policy implications of the findings in a comprehensive manner. Clearly articulate how the results can inform policymakers in addressing public debt dynamics, economic growth, and environmental degradation in the ASEAN-5 countries. Provide specific recommendations based on the empirical evidence and theoretical insights to guide policymakers in formulating effective strategies.

Author Response

Dear author we have revise according to your list of recommendations.

Author Response File: Author Response.pdf

Reviewer 2 Report

sustainability-2417407

THE GRIM COST OF ECONOMIC GROWTH AND ENVIRONMENTAL DEGRADATI

This study investigates the relationship between economic growth, environmental  degradation, and public debt in the ASEAN-5 countries, including Malaysia, Thailand,  the Philippines, Singapore, and Indonesia, using panel ARDL analysis based on data  spanning from 1996 to 2021.  The authors present their findings for the short- and long-run along with some policies. 

In general the paper is good and interesting.

1). I would suggest the authors to merge figure 1 and figure 2. It would be more informative if they would present one graph depicting the public debt as a % of GDP for each country.

2). Lines 108-120. There is no literature support. I would suggest the authors to check papers in the link below: https://pubmed.ncbi.nlm.nih.gov/36892695/

3). I would recommend the authors including a set of control variables such as FDI. The countries under study are heavily affected by FDI inflows (in capital and technology). Even during 1997 crisis the FDI towards Asian countries wasn’t affected, even if they have slowed during the first quarter of 1998. One reason why inflows of FDI to these countries could be expected to increase in the short and medium term is the decrease in the costs, for all firms, of establishing and expanding production facilities in these countries. Furthermore, emerging countries in Asia have low levels of infrastructure capacity and they have heavily relied on external sources such as FDI to finance infrastructure development projects. Hence, public debt (used for infrastructure and for boosting productivity along with social programs) has not become a matter of concern to these Asian economies. I would recommend the following literature:

Siriopoulos, C. et al (2021). Foreign Direct Investment in GCC Countries: The Essential Influence of Governance and the Adoption of IFRS, J. Risk Financial Manag., 14(6), https://doi.org/10.3390/jrfm14060264

Daskalopoulos, E. et al (2016). Assessing variations in foreign direct investments under international financial reporting standards (IFRS) adoption, macro-socioeconomic developments and credit ratings. Investment Management and Financial Innovations, 13(3-2), 328-340. doi:10.21511/imfi.13(3-2).2016.05 

4). The justification of the methodology is not well-justified and convincing (see lines 221-235). Also, the link of CO2 with debt is not well-presented and explained.

5). Regarding policy measures (section 6), the authors make general suggestions. I would suggest being more precise. Focus on 1-2 measures but explain their implementation if followed by the governments. Also, why not applying a higher tax to firms with high CO2 emissions?

Author Response

Dear author, we have revise according to your recommendations. 

Author Response File: Author Response.pdf

Reviewer 3 Report

Thank you for opportunity to review this work. The title is relevant and the abstract is focused, I would restrain the introductory part, i.e. move the two figures and their explanations to the 2.0 section. The would add  few paragraphs about why leaving aside the second gap (lines 248-250). The discussion part is clear, I would expect some comparison to the relevant data for other areas in the world. The conclusion par is short and conclusive, future research lines recommended (limits of the findings in this study, if any)

Mine correction required.

Author Response

Dear author. We have revises according to your suggestions. 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

I think that the authors did a good job in addressing my concerns.

Author Response

Thank you very much for providing us with constructive comments 

Reviewer 2 Report

Dear Authors,

Thank you for the revised version of your manuscript.

As FDI is a major source in Asian economies, I would suggest you to comment and justify why is not included as a variable. Your answer that you have checked your results with other variables is not justified. 

No comments

Author Response

The justification as attach in the file

Author Response File: Author Response.pdf

Round 3

Reviewer 2 Report

Thanks for your reply

no comments

Author Response

Thank you