Exploring the panel and country wise effect of circular economy on environmental sustainability across six leading circular economies

Abstract Investigating the circular economy’s impact on addressing escalating climate change concerns is crucial. The objective of this research is to examine the possible implications of a circular economy on production-based carbon emission, this domain has yet to be thoroughly investigated. This investigation fills the research gap through presenting an under examined proxy for assessing the circular economy through municipal waste generation and treatment. This research investigated data spanning 1991 to 2020 from six advanced circular economies namely, Austria, Belgium, South Korea, Spain, Sweden, and USA, applying numerous estimation techniques to ensure robust and reliable results namely Autoregressive Distributed Lag-Pooled Mean Group (ARDL-PMG), Autoregressive Distributed Lag-Mean Group (ARDL-MG), Autoregressive Distributed Lag-Dynamic Fixed Effects (ARDL-DFE), Fully Modified Ordinary Least Squares (FMOLS), Autoregressive Distributed Lag-Error Correction Model (ARDL-ECM), stability analysis and Pairwise Dumitrescu-Hurlin (D-H) causality. The study determined the influence of the circular economy on production-based emissions using both country-specific and panel data approaches. The findings demonstrate that implementing a circular economy leads to a long-term reduction in production-based carbon emissions in the panel and country wise estimation except Spain. These findings develop understanding of sustainable development difficulties and encourage practitioners to build successful strategies.