Causal nexus between energy consumption and carbon dioxide emission for Malaysia using maximum entropy bootstrap approach

Abstract

This study investigates the relationship between energy consumption and carbon dioxide emission in the causal framework, as the direction of causality remains has a significant policy implication for developed and developing countries. The study employed maximum entropy bootstrap (Meboot) approach to examine the causal nexus between energy consumption and carbon dioxide emission using bivariate as well as multivariate framework for Malaysia, over a period of 1975-2013. This is a unified approach without requiring the use of conventional techniques based on asymptotical theory such as testing for possible unit root and cointegration. In addition, it can be applied in the presence of non-stationary of any type including structural breaks without any type of data transformation to achieve stationary. Thus, it provides more reliable and robust inferences which are insensitive to time span as well as lag length used. The empirical results show that there is a unidirectional causality running from energy consumption to carbon emission both in the bivariate model and multivariate framework, while controlling for broad money supply and population density. The results indicate that Malaysia is an energy-dependent country and hence energy is stimulus to carbon emissions.

A Causal Nexus of Energy Consumption, Private Investment, Economic Growth and Environmental Degradation: Evidence from Pakistan

“…(2016). The second one-way causality is trending from energy usage to CO 2 and the result is in line with, Gul et al (2015). Third unilateral causality is from the consumption of energy to economic growth.…”

Resource management for green growth: Ensure environment sustainability agenda for mutual exclusive global gain

“…Gul et al . considered the case study of Malaysian economy to analyze energy demand and carbon emissions during a period of 1975–2013 and found the energy led carbon emissions in a country. Azam et al .…”

“…Rasul and Sharma [16] considered South Asia as a case study and found that WEF's resources largely compounded by climate change, which should have to be interconnected for sound policy interaction. Gul et al [17] considered the case study of Malaysian economy to analyze energy demand and carbon emissions during a period of 1975-2013 and found the energy led carbon emissions in a country. Azam et al [18] identified different factors of energy demand in the context of three ASEAN countries during the period of 1980-2012 and found that FDI inflows, trade, GDP per capita, and human development index positively correlated with energy demand in three ASEAN countries, while urbanization exert a positive impact on energy demand in Indonesia and Thailand.…”

The Kenya Case of Multivariate Causality of Carbon Dioxide Emissions

“…The second set of studies including Acaravci and Ozturk [19],Ohler and Fetters [41],Azhar KhanZahir KhanZaman et al [42],CaraianiLungu and Dascălu [43],Fuinhas and Marques [44], Apergis and Ozturk [16],Chang [45],ChenKuo and Chen [46], Azhar KhanZahir KhanZaman et al [42],Ozturk and Acaravci [47],Sadorsky [48], Asumadu-Sarkodie and Owusu [49], Pao and Tsai [50], HatzigeorgiouPolatidis and Haralambopoulos [51], Asumadu-Sarkodie and Owusu [52], Soytas and Sari [53], HuangHwang and Yang [54], Lozano and Gutiérrez [55], GulZouHassan et al [56], Jammazi and Aloui [57], QureshiRasli and Zaman [58], AsumaduSarkodie and Owusu [59], MohiuddinAsumadu-Sarkodie and Obaidullah [60], examines the relationship between environmental pollution, energy consumption and economic growth.…”

“…GulZouHassan et al [56] found evidence of a unidirectional causality running from energy-consumption to carbon dioxide emissions. Jammazi and Aloui [57] found a bidirectional causality between energy consumption and economic growth, and a unidirectional causality between energy consumption and carbon dioxide emissions.…”