CO2 emissions,economic growth,energy consumption,trade and urbanization in new EU member and candidate countries: A panel data analysis

This paper investigates the causal relationship between energy consumption, carbon dioxide emissions, economic growth, trade openness and urbanization for a panel of new EU member and candidate countries over the period 1992–2010. Panel unit root tests, panel cointegration methods and panel causality tests are used to investigate this relationship. The main results provide evidence supporting the Environmental Kuznets Curve hypothesis. Hence, there is an inverted U-shaped relationship between environment and income for the sampled countries. The results also indicate that there is a short-run unidirectional panel causality running from energy consumption, trade openness and urbanization to carbon emissions, from GDP to energy consumption, from GDP, energy consumption and urbanization to trade openness, from urbanization to GDP, and from urbanization to trade openness. As for the long-run causal relationship, the results indicate that estimated coefficients of lagged error correction term in the carbon dioxide emissions, energy consumption, GDP, and trade openness equations are statistically significant, implying that these four variables could play an important role in adjustment process as the system departs from the long-run equilibrium.     

Financial market development and trade openness: evidence from emerging economies

International trade is said to be the engine of economic growth. Despite an enormous effort to explain this phenomenon, the relationship between financial market development and trade openness and integration into the world economy is still an enigma. This article investigates the relationship between financial market development and trade openness. To do this, we develop a long-run and short-run model (a bounds testing approach to cointegration) for 18 emerging economies over the period 1980 to 2011. Estimates from all models show that financial market development, including both the stock market and the banking sector, has significant effect on trade openness in both short-run and long-run phenomena in the majority of countries. Despite many similarities among emerging economies, additional evidence suggests that the link between either stock market development or banking sector development with trade openness works via each country’s specific structure.     

Do oil consumption and economic growth intensify environmental degradation? Evidence from developing economies

The purpose of this article is to empirically investigate the impact of economic growth, oil consumption, financial development, industrialization and trade openness on carbon dioxide (CO₂) emissions, particularly in relation to major oil-consuming developing economies. This study utilizes annual data from 1980 to 2012 on a panel of 18 developing countries. Our empirical analysis employs robust panel cointegration tests and a vector error correction model (VECM) framework. The empirical results of three panel cointegration models suggest that there is a significant long-run equilibrium relationship among economic growth, oil consumption, financial development, industrialization, trade openness and CO₂ emissions. Similarly, results from VECMs show that economic growth, oil consumption and industrialization have a short-run dynamic bidirectional feedback relationship with CO₂ emissions. Long-run (error-correction term) bidirectional causalities are found among CO₂ emissions, economic growth, oil consumption, financial development and trade openness. Our results confirm that economic growth and oil consumption have a significant impact on the CO₂ emissions in developing economies. Hence, the findings of this study have important policy implications for mitigating CO₂ emissions and offering sustainable economic development.     

A contribution of foreign direct investment,clean energy,trade openness,carbon emissions and economic growth to energy demand in UAE

This paper investigates the relationship between foreign direct investment, clean energy, trade openness, carbon emissions and economic growth in case of UAE covering the period of 1975Q1–2011Q4. We have tested the unit properties of variables in the presence of structural breaks. The ARDL bounds testing approach is applied to examine the cointegration by accommodating structural breaks stemming in the series. The VECM Granger causality approach is also applied to investigate the causal relationship between the variables. Our empirical findings confirm the existence of cointegration between the series. We find that foreign direct investment, trade openness and carbon emissions decline energy demand. Economic growth and clean energy have positive impact on energy consumption.     

Dynamics between energy,output, openness and financial development in sub-Saharan African countries

This study aims to establish the connection between energy use, economic output, financial development and trade, based on the panel data of 15 sub-Saharan African (SSA) countries during the period from 1983 to 2010. One full main panel and two subpanels were created by incorporating low-income and middle-income countries. The panel cointegration test results indicate a long-run relationship between the variables. The mean group (MG) estimators show that energy consumption, financial development, capital and international trade have significant impacts on economic output. In the case of middle-income countries, the Granger causality analysis reveals that rising economic output leads to higher energy consumption, but this is not true vice versa. This means that energy conservation measures are unlikely to have adverse impacts upon economic output. On the other hand, there is a complementary relationship between financial development and energy consumption. In this case, energy conservation measures should be critically analysed and implemented, so as not to have an unfavourable impact on financial development. In regard to low-income economies, there is no relationship between energy use and any of the other variables mentioned. Thus, a reduction in energy consumption has little or no significant impact on output, financial development, capital and trade.     

The impact of financial development,income, energy and trade on carbon emissions: Evidence from the Indian economy

This paper examines the long-run equilibrium and the existence and direction of a causal relationship between carbon emissions, financial development, economic growth, energy consumption and trade openness for India. Our main contribution to the literature on Indian studies lies in the investigation of the causes of carbon emissions by taking into account the role of financial development and using single country data. The results suggest that there is evidence on the long-run and causal relationships between carbon emissions, financial development, income, energy use and trade openness. Financial development has a long-run positive impact on carbon emissions, implying that financial development improves environmental degradation. Moreover, Granger causality test indicates a long-run unidirectional causality running from financial development to carbon emissions and energy use. The evidence suggests that financial system should take into account the environment aspect in their current operations. The results of this study may be of great importance for policy and decision-makers in order to develop energy policies for India that contribute to the curbing of carbon emissions while preserving economic growth.     

The causal dynamics between renewable energy,real GDP,emissions and oil prices: evidence from OECD countries

This study extends the empirical literature on the determinants of renewable energy consumption in the case of 25 OECD countries for the period 1980–2011. Preliminary analysis suggests the presence of cross-sectional dependence within the panel data. As a result, second-generation panel unit root tests of Smith et al. (2004) and Pesaran (2007) are undertaken to find the respective variables that are integrated of order one. Panel cointegration and error correction modelling reveal that a long-run relationship exists between renewable energy consumption per capita, real GDP per capita, carbon dioxide emissions per capita and real oil prices. The long-run elasticity estimates are positive and statistically significant for real GDP per capita, carbon dioxide emissions per capita and real oil prices. The panel error correction model shows that a feedback relationship exists among the variables.     

ARE THE TWIN DEFICITS REALLY RELATED?

The emergence of record current-account and fiscal deficits in the United States during the 1980s draws increasing attention to what has become known as the "twin deficit" problem. Conventional wisdom is that a shift to larger government deficits entails a decline in government saving and results in larger trade deficits, Persistently large trade deficits are troublesome because they imply a transfer of wealth to foreigners and possibly a reduction in future generations' living standards.
This paper examines whether post-World War II data for the United States reveal a long-run secular relationship between the trade deficit and the fiscal deficit. The focus is on the secular relationship since that is the one most relevant to long-run policy concerns. The authors employ three different statistical techniques: (i) a deterministic technique for separating the secular components from the cyclical components to derive secular measures of the twin deficits, (ii) a stochastic procedure to isolate the secular components, (Hi) cointegration analysis to test for a long-run equilibrium relationship.
The authors conclude that, based on the first two approaches, evidence of a positive secular relationship between the twin deficits exists only under flexible exchange rates. This relationship appears quite strong–that is, a $1 change in the fiscal deficit eventually leads to roughly a $1 change in the trade deficit. On the other hand, findings based on cointegration analysis indicate no long-run equilibrium relationship between the twin deficits. This latter finding, however, may reflect a low power of the relevant statistical tests stemming from the shortness of the sample period.     

CO2 emissions,output, energy consumption,and trade in Tunisia

This article contributes to the literature by investigating the dynamic relationship between carbon dioxide (CO₂) emissions, output (GDP), energy consumption, and trade using the bounds testing approach to cointegration and the ARDL methodology for Tunisia over the period 1971–2008. The empirical results reveal the existence of two causal long-run relationships between the variables. In the short-run, there are three unidirectional Granger causality relationships, which run from GDP, squared GDP and energy consumption to CO₂ emissions. To check the stability in the parameter of the selected model, CUSUM and CUSUMSQ were used. The results also provide important policy implications.     

The long-run effect of foreign direct investment on total factor productivity in developing countries: a panel cointegration analysis

This paper examines the long-run effect of the level of foreign direct investment (FDI) on the level of total factor productivity (TFP) for 49 developing countries for the period 1981–2011 using panel cointegration and causality techniques. It is found that (i) FDI has, on average, a negative long-run effect on TFP in developing countries, (ii) long-run causality runs in only one direction, from FDI to TFP, (iii) in the short run, TFP has a negative effect on FDI, and (iv) the long-run effect of FDI of TFP differs between selected groups of countries: While the estimated long-run FDI–TFP coefficients are always relatively large, negative, and significant for countries with lower levels of human capital, financial development, and trade openness, the estimated effects are relatively small, insignificant, or even significantly positive for subgroups of countries with higher levels of human capital, financial development, and trade openness.     

India's trade balance in the 1980s an econometric analysis

The paper is an examination of India's trade balance in the 1980s. The approach attempted is of examining the bilateral trade balances of India with nine trading partners from the non-communist bloc. The long-run equilibrium relations are studied via two VAR models in Johansen's multivariate cointegration framework. Five hypotheses of interest are singled out for attention. The nominal and real exchange rates consistently emerge as important influences on the trade balance. However, as the exchange rates fail weak exogeneity tests, policy implications are not clear cut.     

Consumption and fiscal policy

This paper uses the life-cycle approach to derive an equilibrium intratemporal efficiency condition which relates the marginal utility of consumption of nondurable goods and services to the marginal utility of consumption of services from durable goods. Given this condition and the assumption that marginal utilities are affected by the level of public spending, a long-run relationship between components of private consumption and public expenditure is then postulated. The application of cointegration analysis to UK data supports the existence and uniqueness of such a long-run relationship, and estimates based on the error correction approach produce results which suggest that (i) a change in public spending has different effects on components of private consumption in the short-run, and (ii) the entire burden of long-run substitution falls on nondurable consumption.     

Dynamic effects of trade openness on financial development

This paper employs the Pooled Mean Group (PMG) approach of Pesaran et al. (1999) to study the dynamic effects of trade openness on financial development. The advantage of the PMG estimator over other dynamic panel econometric techniques is that it allows short-run coefficients, speeds of adjustment and error variances to vary across countries, with cross-country homogeneity restrictions only on long-run parameters. Our results spanning 88 countries over 1960–2005 show that a positive long-run relationship between trade openness and financial development coexists with a negative short-run relationship. But when splitting the data into different income or inflation groups, this finding is observed only in relatively low-income countries or high-inflation economies.     

Trade openness and child health: a heterogeneous panel cointegration analysis

ABSTRACT

In this paper, we examine the impact of trade openness on child health, based on a cross-country panel data set covering 66 countries for the period 1960–2013. To account for the time-series properties of the data and potential cross-country heterogeneity in the impact of trade openness, the study employs heterogeneous panel cointegration techniques that are robust to omitted variables and endogeneity problems. The results reveal that trade openness and child health are cointegrated, and that trade works to reduce the child mortality rate significantly in the long-run. The results are robust to the methodology and trade openness and child health indicators employed, as well as to the presence of cross-sectional dependence and changes in the sample composition. The findings also suggest that the impact of trade on child health tends to be stronger in countries with better institutional quality, lower corruption, good governance, political stability, and sound policies that promote private sector development.     

Modelling of narrow money demand in Australia: an ARDL cointegration approach, 1970–2009

Using annual data for the period 1970?C2009, this paper deploys the ARDL cointegration approach to determine whether there exists an economically meaningful, stable narrow money demand relationship in Australia. The statistical results suggest the presence of a long-run equilibrium relationship between real narrow money balances, real income, a representative domestic interest rate (e.g., the yield on Australian government short-term bonds) and the nominal effective exchange rate of the Australian dollar. The statistical tests suggest no significant instability in the narrow money demand relationship despite financial deregulation and innovation in Australia since the early 1980s. In contrast, the paper reports statistical results which suggest no meaningful, stable broad money demand relationship in Australia over the sample period.     

Empirical study on the determinants of CO2 emissions: evidence from OECD countries

This article empirically investigates the Environmental Kuznets Curve (EKC) for CO₂ emissions in the cases of 11 OECD countries by taking into account the role of nuclear energy in electricity production. The autoregressive distributed lag approach to cointegration is employed as the estimation method. Our results indicate that energy consumption has a positive impact on CO₂ emissions in most countries in the study. However, the impact of trade is not statistically significant. The results provide evidence for the role of nuclear power in reducing CO₂ emissions only in some countries. Additionally, although the estimated long-run coefficients of income and its square satisfy the EKC hypothesis in Finland, Japan, Korea and Spain, only Finland's EKC turning point is inside the sample period of the study, providing poor evidence in support of the EKC hypothesis.     

Does trade openness affect long run growth? Cointegration,causality and forecast error variance decomposition tests for Pakistan

The study investigates the impact of trade openness on economic growth in the long run. We apply the ARDL bounds testing approach to test for a long run relationship and the augmented production function by incorporating financial development as an additional determinant of economic growth using the framework of Mankiw et al. (1992). The results confirm cointegration among the series. In the long run, trade openness promotes economic growth. The growth-led-trade hypothesis is vindicated by VECM Granger causality test. The causality is also checked by using the innovative accounting approach (IAA).     

The J-curve: Malaysia versus her major trading partners

Currency depreciation is said to worsen the trade balance before improving it, hence the J-curve phenomenon. Since introduction of cointegration and error-correction modelling, researchers have tried to distinguish the short-run effects of currency depreciation from its long-run effects. A few studies that have investigated the experience of Malaysia, have relied upon aggregate trade data and have found no strong support for a significant relation between the real value of the ringgit and the Malaysian trade balance. In this article, we disaggregate the data by country and consider Malaysia's bilateral trade balance with her 14 largest trading partners. Using bound testing approach to cointegration and error-correction modelling, we provide some support for the J-curve hypothesis.     

The J-curve dynamics of Turkey: an application of ARDL model

This article seeks an empirical evidence for the existence of the J-curve phenomenon both in the short-run and long-run for Turkey over the period 1980-2005. The bounds testing cointegration approach is employed to estimate the trade balance model. An augmented form of Granger causality analysis is implemented between trade balance, real effective exchange rates, foreign income and domestic income. The stability of the short-run as well as long-run coefficients in the trade balance model is tested too. The empirical results that the J-curve phenomenon is supported only in the short-run. Whilst causality tests reveal mix results, the parameter stability tests seem to be inconclusive.     

Openness,productivity and growth in the APEC economies

The 1980s and 1990s have witnessed the emergence of many Asian economies as important traders in the world. How has openness to trade and investment affected productivity and growth performance in those economies? This question is often tackled with the traditional growth regression method. However, the findings in the existing literature are still inconclusive. This paper proposes an alternative approach which is employed to examine the impact of openness on the sources of productivity and growth in the APEC economies. Specifically, the proposed technique distinguishes technological progress (innovation) from efficiency changes (catch-up) and attempts to isolate the influences of openness on these two distinct factors. The findings in this study may help gain fresh insight into the relationship between openness and productivity and growth performance in the APEC economies.First revision received: July 2001/Final revision received: May 2003The author thanks two anonymous referees for very helpful comments.