Environmental Quality, Renewable Energy, Trade Openness and Economic Growth: Evidence from Two Groups of Developing Countries
The purpose of this study is to examine the short-run and long-run causal relationship between economic growth, renewable energy, trade openness and carbon dioxide emission (CO2) as an indicator of environmental quality for two panels of developing countries including nine Asian developing countries and six European developing countries. A panel vector error correction model (Panel-VECM) causality is employed to investigate causality relation between the variables of interest. The empirical finding of short-run indicates bidirectional causality between GDP and CO2 emissions and unidirectional causality from renewable energy and trade openness to CO2 emissions for both Asian and European panels. Furthermore, there is evidence of unidirectional causality from GDP to renewable energy for Asian panel, while for European panel, bidirectional causality exist between renewable energy and GDP.
Aliprandi, F., Stoppato, A. and A. Mirandola (2016) . Estimating CO2 emissions reduction from renewable energy use in Italy. Renewable Energy, 96: 220-232.
Aïssa, M.S.B., Jebli, M.B. and S.B. Youssef (2014) . Output, renewable energy consumption and trade in Africa. Energy Policy, 66: 11-18.
Apergis,N. and J.E. Payne (2014). Renewable energy, output, CO2 emissions, and fossil fuel prices in Central America: Evidence from a nonlinear panel smooth transition vector error correction model. Energy Economics, 42: 226-232.
Apergis,N. and J.E. Payne (2015). Renewable energy, output, carbon dioxide emissions, and oil prices: Evidence from South America. Energy Sources, Part B: Economics, Planning, and Policy, 10(3): 281-287.
Apergis, N., Payne, J.E., Menyah, K. and Y. Wolde-Rufael (2010). On the causal dynamics between emissions, nuclear energy, renewable energy, and economic growth. Ecological Economics, 69(11): 2255-2260.
Baltagi, B.H. (2005). Econometric analysis of panel data (3rd ed.). Chichester: John Wiley & Sons, Ltd.
Begum, R.A., Abdullah, S.M.S., Sarkar, M. and S. Kabir (2017). Time Series Patterns and Relationship of Energy Consumption and CO2 Emissions in Malaysia. Asian Journal of Water, Environment and Pollution, 14(2): 41-49.
Bölük, G. and M. Mert (2014). Fossil and renewable energy consumption, GHGs (greenhouse gases) and economic growth: Evidence from a panel of EU (European Union) countries. Energy, 74: 439-446.
Choi, I. (2001). Unit root tests for panel data. Journal of International Money and Finance, 20(2): 249-272.
De Arce, M.P., Sauma, E. and J. Contreras (2016). Renewable energy policy performance in reducing CO2 emissions. Energy Economics, 54: 272-280.
Dickey, D.A. and W.A. Fuller (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366a): 427-431.
Dickey, D.A. and W.A. Fuller (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: Journal of the Econometric Society, 1057- 1072.
Dogan, E. and F. Seker (2016). The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries. Renewable and Sustainable Energy Reviews, 60: 1074-1085.
Engle, R.F. and C.W. Granger (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica: Journal of the Econometric Society, 251- 276.
Granger, C.W. (1981). Some properties of time series data and their use in econometric model specification. Journal of Econometrics, 16(1): 121-130.
Hassine, M.B. and N. Harrathi (2017). The Causal Links between Economic Growth, Renewable Energy, Financial Development and Foreign Trade in Gulf Cooperation Council Countries . International Journal of Energy Economics and Policy, 7(2).
Hsiao, C. (2014). Analysis of Panel Data, No. 54. Cambridge University Press, Cambridge.
Im, K.S., Pesaran, M.H. and Y. Shin (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1): 53-74.
Jebli, M.B. and S.B. Youssef (2015a). The environmental Kuznets curve, economic growth, renewable and non- renewable energy, and trade in Tunisia. Renewable and Sustainable Energy Reviews, 47: 173-185.
Jebli, M.B. and S.B. Youssef (2015b). Output, renewable and non-renewable energy consumption and international trade: Evidence from a panel of 69 countries. Renewable Energy, 83: 799-808.
Jebli, M.B., Youssef, S.B. and I. Ozturk (2016). Testing environmental Kuznets curve hypothesis: The role of renewable and non-renewable energy consumption and trade in OECD countries. Ecological Indicators, 60: 824-831.
Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90(1): 1-44.
Kao, C. and M.H. Chiang (2000). On the estimation and inference of a cointegrated regression in panel data. Advances in Econometrics, 15: 179-222.
Koçak, E. and A. Şarkgüneşi (2017). The renewable energy and economic growth nexus in Black Sea and Balkan countries. Energy Policy, 100: 51-57.
Leitao, N.C. (2014). Economic growth, carbon dioxide emissions, renewable energy and globalization. International Journal of Energy Economics and Policy, 4(3): 391.
Levin,A. and C.F. Lin (1993). Unit Root Tests in Panel Data: Asymptotic and Finite Sample Properties. Working Paper, University of California, San Diego.
Levin, A., Lin, C.F. and C.S.J. Chu (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108(1): 1-24.
López-Menéndez, A.J., Pérez, R. and B. Moreno (2014). Environmental costs and renewable energy: Re-visiting the Environmental Kuznets Curve. Journal of Environmental Management, 145: 368-373.
Maddala, G.S. and S. Wu (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61(S1): 631-652.
Menyah, K. and Y. Wolde-Rufael (2010). CO2 emissions, nuclear energy, renewable energy and economic growth in the US. Energy Policy, 38(6): 2911-2915.
Omri, A., Mabrouk, N.B. and A. Sassi-Tmar (2015) . Modeling the causal linkages between nuclear energy, renewable energy and economic growth in developed and developing countries. Renewable and Sustainable Energy Reviews, 42: 1012-1022.
Ozturk, I. and A. Acaravci (2016). Energy consumption, CO2 emissions, economic growth, and foreign trade relationship in Cyprus and Malta. Energy Sources, Part B: Economics, Planning, and Policy, 11(4): 321-327.
Pao, H.T. and C.M. Tsai (2011) . Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy, 36(1): 685-693.
Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics, 61(s 1): 653-670.
Pedroni, P. (2004). Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20(03): 597-625.
Sebri, M. and O. Ben-Salha (2014). On the causal dynamics between economic growth, renewable energy consumption, CO2 emissions and trade openness: Fresh evidence from BRICS countries. Renewable and Sustainable Energy Reviews, 39: 14-23.
Sek, S. (2017). The impact of energy consumption on economic growth: The case of China. Applied Ecology and Environmental Research, 15(3): 1243-1254.
U.S. Energy Information Administration (2016). International Energy Outlook 2016.
Zaidi, I., Ahmed, R.M.A. and K.S. Siok (2017). Examining the relationship between economic growth, energy consumption and CO2 emission using inverse function regression. Applied Ecology and Environmental Research, 15(1): 473-484.
Zoundi, Z. (2017). CO2 emissions, renewable energy and the Environmental Kuznets Curve, a panel cointegration approach. Renewable and Sustainable Energy Reviews, 72: 1067-1075.