Fiscal decentralization, monetary policy, and ecological sustainability in G20 economies: evidence from CS-ARDL analysis

Environmental degradation has intensified across G20 countries, which account for most global GDP and a large share of carbon emissions. While prior research has largely emphasized economic growth and natural resource use as drivers of environmental pressure, the combined roles of monetary policy, fiscal decentralization, technological innovation, and natural resource rents remain underexplored. This study investigates how these macroeconomic and institutional factors influence the ecological footprint (EFP) in G20 economies from 1990 to 2024. Using the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model and Westerlund cointegration tests, the analysis controls for cross-sectional dependence and slope heterogeneity to produce reliable short- and long-run estimates. The results indicate a stable long-run relationship among the variables. Economic growth and natural resource rents significantly increase the ecological footprint, whereas fiscal decentralization and monetary policy reduce it. Technological advancement lowers environmental pressure in the short run but shows no significant long-term effect. These findings highlight the importance of integrated macroeconomic and institutional strategies for environmental governance. The study contributes by providing a unified assessment of fiscal, monetary, and technological drivers of EFP in G20 economies and by employing advanced econometric techniques that enhance empirical reliability. A key policy implication is that coordinated fiscal decentralization and environmentally responsive monetary policy frameworks are essential for achieving long-term ecological sustainability in high-emission economies.