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In every society, there exist disadvantaged groups who have failed constantly to take part in the development of the economy and reap the benefits of economic growth as well. Along with economic and social factors, environmental factors are also accountable in making inclusion a challenge for the marginalized group. Contaminated drinking water, inappropriate sanitation systems, and pollution are the factors that affect health and wellbeing of the poor class by affecting their productivity. Thus, the lack of a clean environment leads the poor section towards further poverty and income inequality. Since the 2030 Agenda for Sustainable Development emphasizes three components to achieve sustainable development, namely economic, social, and environmental, this study inspects the role of macroeconomic policies in ensuring an inclusive clean environment in developing countries. Moreover, it considers the composite effect of fiscal policy and monetary policy on environmental inclusion by including interactive terms. This investigation uses FE-2SLS on a panel of 51 developing countries for the period of 1995-2019 to analyse the impact of macroeconomic policies on environmental inclusion. The study provides empirical evidence that fiscal and monetary policy has the potential to ensure an inclusive clean environment in developing countries. The findings imply that the macroeconomic policy actions depend on each other. Furthermore, governments in developing regions are required to cut nondeveloping expenditures and use expansionary monetary policy to promote green growth., (© 2022. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.)

This paper aims to analyse the interactive role of fiscal and monetary policies in promoting inclusive growth. In this attempt, we use a panel data of 51 developing countries for the period 1995-2017 and employ state-of-the-art panel data estimation methods. The paper concludes that expansionary fiscal and monetary policies both affect economic inclusiveness in the developing region. However, it is observed that high expenditures in developing countries, which lead to debt crises, not only directly affect economic inclusiveness but also reduce the effectiveness of monetary policy. Therefore, the governments in these countries may consider cutting their spending. Thus, an increase in the money supply with a low to median level of government expenditure is a favourable policy option. [ABSTRACT FROM AUTHOR]