Asymmetric and time-varying linkages between carbon emissions, globalization, natural resources and financial development in China

Abstract

In the real world, economic covariates follow asymmetric and time-varying patterns. Therefore, it is imperative to integrate these effects while estimating environmental and economic relationships. Although prevailing literature reveals various emissions-deriving and eliminating factors, however, there is a dearth of empirical evidence that estimates the asymmetric and time-varying effect of globalization, natural resources, and financial development from a multidimensional perspective in China. In doing so, we employ the nonlinear autoregressive distributed lag (NARDL) and cross-wavelet modeling framework to explore the long- and short-run nonlinear and time-variant association between globalization, natural resources, financial development, and carbon emissions from 1980 to 2017. The NARDL method has the benefit of discriminating the long-term and short-term asymmetric carbon emission responses due to a positive and negative shock in our primary variables of interest. Mainly, the findings of NARDL estimations confirm that positive shocks in globalization and financial developments have a significant positive impact on carbon emissions, whereas negative shock in natural resources has a significant positive impact on carbon emissions. Similarly, the outcomes of continuous wavelet transformation and wavelet transformation coherence confirm the causal linkages between covariates; however, this effect varies across different time and frequency domains. These results imply that environmental researchers should consider asymmetric transmission channels and time–frequency associations among variables to devise long-term sustainable policies.

Can Financial Development Help in Raising Sustainable Economic Growth and Reduce Environmental Pollution in Pakistan? Evidence from Non Linear ARDL Model

“…This study is conducted in the light of research work by Shin et al (2014) in which they decomposed the variable in the positive and negative partial sums. Usually, the positive shocks in financial development increase economic growth and environmental up-gradation while the negative shocks decrease economic growth and environmental degradations (Chen et al,2020;Ling et al, 2021;Aigheyisi & Edore, 2019;Karasoy et al, 2019;Ahmad et al, 2018). Figure 2 In the present study financial development is measured in terms of domestic credit to banks (DCB).…”

“…The literature show mixed evidence between asymmetric impact of financial development on environmental pollution. Ling et al (2021) pointed out that the positive shocks in financial development significantly increase carbon emissions while the negative shocks insignificantly increase carbon emissions. In Pakistan Majeed et al (2020) examined the asymmetric impact of financial development on carbon emissions from 1972 to 2018.…”

Linkage of natural resources, economic policies, urbanization, and the environmental Kuznets curve

“…Moreover, the available resources may help to face these challenges successfully. Natural resources are viewed as substantially important for the sustainable environment and economy (Ling et al 2021 ). However, the energy structure is also relevant to achieving a sustainable environment.…”

Environmental performance and international trade in China: The role of renewable energy and eco‐innovation

“…The recent growth in China has witnessed numerous new issues in terms of the relationship between carbon emissions, renewable energy, and green innovation. In the last decade, China has invested in renewable energy, which accounts for approximately 30% of the global trade volume (Kusch‐Brandt, 2019; Ling et al, 2021). China's industries consume approximately 3.03 billion tons of coal, which accounts for 80.17% of the total industrial energy consumption (Fang et al, 2020; Mi et al, 2021).…”