Do positive and negative shocks of institutional quality affect the ecological footprint in a developing economy?

Purpose: The discourse on the governance and environment nexus has been an important research agenda. However, the debate on the role of institutional quality (IQ) in environmental degradation is continuous. Unlike others, this study aims to examine the asymmetric effect of IQ on the ecological footprint (EF) from 1984 to 2019 in Pakistan. Design/methodology/approach: The nonlinear autoregressive distributive lag model is used to empirically investigate the linkage of IQ and EF. Findings: Reported results revealed that positive shocks are negatively affecting EF and negative shocks are positively affecting EF. Findings suggest that a better IQ is substantially reducing EF, whereas energy consumption and economic growth are increasing EF. Originality/value: This study is original and provided important information about the performance of institutions regarding the environmental concerns in Pakistan. Moreover, this study has robust policy implications.