Renewable and non-renewable energy use - economic growth nexus: The case of MENA Net Oil Importing Countries
TL;DR: In this article, the authors examined the energy use -economic growth nexus by disaggregating energy use into two types of energy, renewable and non-renewable energy use, and provided evidence for long-term equilibrium relationship between real Gross Domestic Product (GDP), renewable energy use (EHE), non-Renewable EHE, real gross fixed capital formation and labor force.
Abstract: This study examines the energy use – economic growth nexus by disaggregating energy use into two types of energy, renewable and non-renewable energy use. Our sample consists of eleven MENA Net Oil Importing Countries (NOICs) during the period 1980–2012. A multivariate panel framework was used to estimate the long run relationship and the panel Granger causality tests was employed to assess the causality direction among variables. The empirical results provide evidence for long-term equilibrium relationship between real Gross Domestic Product (GDP), renewable energy use, non-renewable energy use, real gross fixed capital formation and labor force. The results provide evidence also for positive and statistically significant elasticities. Moreover, the empirical findings from panel Error Correction Model confirm the existence of bidirectional causality between renewable energy use and economic growth, and between non-renewable energy use and economic growth, results that support the feedback hypothesis. Moreover, our empirical findings provide evidence for two way (bidirectional) causal association in both the short and long-run between renewable and non-renewable energy use which proves the substitutability and interdependence between these two types of energy sources. The policies implications of these results are also proposed and discussed.
Citations
More filters
TL;DR: In this paper, the authors employed the panel vector autoregressive (PVAR) model to examine the impact of renewable energy and financial development on carbon dioxide (CO2) emissions and economic growth.
558 citations
TL;DR: In this paper, Al-Mulali and Ozturk extended the basic Environment Kuznets Curve (EKC) hypothesis by considering life expectancy at birth, fertility rate and political institutional index variables as new possible determinants of environmental degradation.
Abstract: This paper extends the work of Al-Mulali and Ozturk (2015) [1] by re-investigating the Environment Kuznets Curve (EKC) hypothesis for 15 MENA (Middle East and North African) countries using the Ecological Footprint (EF) as a proxy of environmental degradation over the period 1975–2007. Unlike the existing studies, we augment the basic EKC relationship by considering life expectancy at birth, fertility rate and political institutional index variables as new possible determinants of environmental degradation. The estimation of this relationship has been conducted for all MENA 15 countries, for oil-exporting and non-oil-exporting countries sub-samples. The results show that energy use worsens ecological footprint, whereas real GDP per capita exhibits an inverted U-shaped relationship with EF in oil-exporting countries and in the sample as a whole, i.e., the EKC hypothesis is validated. For the non-oil-exporting countries, the relationship between EF and economic growth is U-shaped. Moreover, our findings show that socio-demographic variables such as urbanization, life expectancy at birth and fertility rate improve the environment in the long term. We also found that the improvement of political institutions in those countries has not been accompanied by a reduction of environmental stress. The Granger causality results support evidence of the existence of an error correction mechanism between the EF, real GDP, energy use and the fertility rate. Specifically, in the short term, we found strong evidence for bidirectional causality among the ecological, real GDP and energy-use variables.
430 citations
TL;DR: In this article, the authors explore the link between urbanization, economic development, energy consumption, and CO2 emissions, specifically taking into account the different income levels of the countries studied.
Abstract: The growth of anthropogenic CO2 emissions has been widely attributed to the combustion of energy in support of human activities associated with economic development. While the link between urbanization, economic growth, energy consumption, and CO2 emissions has, as a result, received considerable multidisciplinary scholarly attention, little work has been undertaken with respect to the how differences in the development stages or income levels of the countries studied may affect these relations. Here, we empirically explore the link between urbanization, economic development, energy consumption, and CO2 emissions, specifically taking into account the different income levels of the countries studied. A series of panel data models and a balanced dataset for a panel of 170 countries were utilized in the study, which took the period of 1980–2011 into consideration. The result of panel cointegration tests suggested that a cointegration relationship existed between variables in all the countries studied, and that a statistically significant positive relationship existed between the variables employed in the long run. The results of a Granger causality test based on the Vector Error-Correction Model (VECM) provided evidence of varied Granger causality relationships between the variables across the income-based subpanels. Moreover, we also undertook an impulse response and variance decomposition analysis that allowed us to forecast the impacts of economic growth, urbanization, and energy consumption on future CO2 emissions during the period surveyed. Our results cast a new light on the importance of a country's development stage and income level for government policy decisions relating to the reduction of CO2 emissions.
367 citations
TL;DR: In this paper, the authors investigated the long-term output elasticities between renewable energy consumption and non-renewable energy consumption in Asia-pacific economic cooperation (APEC) countries.
352 citations
TL;DR: In this paper, the effects of economic growth, energy consumption, trade openness, urbanization and financial development on environmental degradation by using the Markov Switching Equilibrium Correction Model with shifts in both the intercept and income per capita slope for the period 1970-2015 Unlike existing studies and in addition to the CO 2 emissions pollutant, this paper uses the total ecological footprint and Ecological carbon footprint as new proxies of environmental degradation.
346 citations
References
More filters
TL;DR: The relationship between co-integration and error correction models, first suggested in Granger (1981), is here extended and used to develop estimation procedures, tests, and empirical examples.
Abstract: The relationship between co-integration and error correction models, first suggested in Granger (1981), is here extended and used to develop estimation procedures, tests, and empirical examples. If each element of a vector of time series x first achieves stationarity after differencing, but a linear combination a'x is already stationary, the time series x are said to be co-integrated with co-integrating vector a. There may be several such co-integrating vectors so that a becomes a matrix. Interpreting a'x,= 0 as a long run equilibrium, co-integration implies that deviations from equilibrium are stationary, with finite variance, even though the series themselves are nonstationary and have infinite variance. The paper presents a representation theorem based on Granger (1983), which connects the moving average, autoregressive, and error correction representations for co-integrated systems. A vector autoregression in differenced variables is incompatible with these representations. Estimation of these models is discussed and a simple but asymptotically efficient two-step estimator is proposed. Testing for co-integration combines the problems of unit root tests and tests with parameters unidentified under the null. Seven statistics are formulated and analyzed. The critical values of these statistics are calculated based on a Monte Carlo simulation. Using these critical values, the power properties of the tests are examined and one test procedure is recommended for application. In a series of examples it is found that consumption and income are co-integrated, wages and prices are not, short and long interest rates are, and nominal GNP is co-integrated with M2, but not M1, M3, or aggregate liquid assets.
27,170 citations
TL;DR: In this article, the limit distributions of the estimator of p and of the regression t test are derived under the assumption that p = ± 1, where p is a fixed constant and t is a sequence of independent normal random variables.
Abstract: Let n observations Y 1, Y 2, ···, Y n be generated by the model Y t = pY t−1 + e t , where Y 0 is a fixed constant and {e t } t-1 n is a sequence of independent normal random variables with mean 0 and variance σ2. Properties of the regression estimator of p are obtained under the assumption that p = ±1. Representations for the limit distributions of the estimator of p and of the regression t test are derived. The estimator of p and the regression t test furnish methods of testing the hypothesis that p = 1.
23,509 citations
"Renewable and non-renewable energy ..." refers background in this paper
...Kao [122] proposes an Augmented Dickey-Fuller (ADF) panel cointegration test where the vectors of cointegration are homogeneous....
[...]
...However and since the seminal paper of Dickey and Fuller [108] that have introduced the unit root tests in time series context, a large number of unit root tests have been developed in the last three decades both in the time series and the panel data contexts....
[...]
...Dickey and Fuller [108] that have introduced the unit root tests in time series context, a large number of unit root tests have been developed in the last three decades both...
[...]
...The literature in unit root tests is also rich and several tests have been propose din the empirical literature [108-114]....
[...]
...[108]Dickey D, Fuller W. Distribution of the Estimators for Autoregressive Time Series with a Unit Root....
[...]
TL;DR: In this article, a unit root test for dynamic heterogeneous panels based on the mean of individual unit root statistics is proposed, which converges in probability to a standard normal variate sequentially with T (the time series dimension) →∞, followed by N (the cross sectional dimension)→∞.
12,838 citations
"Renewable and non-renewable energy ..." refers background in this paper
...As previously discussed, several panel unit root tests have been proposed in the context of cross-sectional independence (see for instance [109-113])....
[...]
...The literature in unit root tests is also rich and several tests have been propose din the empirical literature [108-114]....
[...]
TL;DR: In this article, the authors consider pooling cross-section time series data for testing the unit root hypothesis, and they show that the power of the panel-based unit root test is dramatically higher, compared to performing a separate unit-root test for each individual time series.
10,792 citations
"Renewable and non-renewable energy ..." refers background or methods in this paper
...While, the null hypothesis for the LLC [112] and Breitung [109] tests is the unit root case, for the Hadri [110] test the null hypothesis corresponds to the stationarity case....
[...]
...(LLC, [112]), Maddala and Wu [113] and Pesaran [114] among many others....
[...]
...While, the null hypothesis for the LLC [112] and Breitung [109] tests is the unit root case, for the Hadri [110] test the null hypothesis corresponds to the stationarity case. b. Heterogeneous case The assumption of homogeneity in economic is very restrictive as it is hard to admit the existence of dynamic properties for all series of the same variable, independently of the country concerned....
[...]
...Three tests fall into this first subgroup namely the LLC [112], Breitung [109] and Hadri[110] tests....
[...]
...This group of tests, cross-sectional independence tests, can be also subdivided intotwo subgroups: (a) homogenous and (b) heterogeneous cases. a. Homogenous case Three tests fall into this first subgroup namely the LLC [112], Breitung [109] and Hadri[110] tests....
[...]
TL;DR: The Im-Pesaran-Shin (IPS) test as discussed by the authors relaxes the restrictive assumption of the LL test and is best viewed as a test for summarizing the evidence from independent tests of the sample hypothesis.
Abstract: The panel data unit root test suggested by Levin and Lin (LL) has been widely used in several applications, notably in papers on tests of the purchasing power parity hypothesis. This test is based on a very restrictive hypothesis which is rarely ever of interest in practice. The Im–Pesaran–Shin (IPS) test relaxes the restrictive assumption of the LL test. This paper argues that although the IPS test has been offered as a generalization of the LL test, it is best viewed as a test for summarizing the evidence from a number of independent tests of the sample hypothesis. This problem has a long statistical history going back to R. A. Fisher. This paper suggests the Fisher test as a panel data unit root test, compares it with the LL and IPS tests, and the Bonferroni bounds test which is valid for correlated tests. Overall, the evidence points to the Fisher test with bootstrap-based critical values as the preferred choice. We also suggest the use of the Fisher test for testing stationarity as the null and also in testing for cointegration in panel data.
6,652 citations
"Renewable and non-renewable energy ..." refers background or methods in this paper
...As previously discussed, several panel unit root tests have been proposed in the context of cross-sectional independence (see for instance [109-113])....
[...]
...(LLC, [112]), Maddala and Wu [113] and Pesaran [114] among many others....
[...]
...Thus, in addition to the homogeneity tests, we propose to use the ADF- and PP-Fischer tests of Maddala and Wu [113] and the Im et al....
[...]
...The literature in unit root tests is also rich and several tests have been propose din the empirical literature [108-114]....
[...]