CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models

Abstract

This paper examines the nexus between CO2 emissions, energy consumption and economic growth using simultaneous-equations models with panel data of 14 MENA countries over the period 1990-2011. Our empirical results show that there exists bidirectional causal relationship between energy consumption and economic growth. However, the results support the occurrence of unidirectional causality from energy consumption to CO2 emissions without any feedback effects, and there exists bidirectional causal relationship between economic growth and CO2 emissions for the region as a whole. The study suggests that environmental and energy policies should recognize the differences in the nexus between energy consumption and economic growth in order to maintain sustainable economic growth in MENA region.Keywords: Carbon dioxide emissions, Energy consumption, Economic growth. 2 IntrodutionThe nexus between environmental pollutant, energy consumption and economic growth has been the subject of considerable academic research over the past few decades. According to the Environmental Kuznets Curve (EKC) hypothesis, as output increases, carbon dioxide emissions increase as well until some threshold level of output was reached after which these emissions begin to decline. The main reason for studying carbon emissions is that they play a focal role in the current debate on the environment protection and sustainable development.Economic growth is also closely linked to energy consumption since higher level of energy consumption leads to higher economic growth. However, it is also likely that more efficient use of energy resources requires a higher level of economic growth.In literature, the nexus between environment-energy-growth has attracted attention of researchers in different countries for a long time. Roughly, we can categorize past studies in this field into three strands. The first focuses on the validity of the Environmental Kuznets Curve (EKC) hypothesis. The EKC hypothesis postulates that the relationship between economic development and the environment resembles an inverted U-curve, i.g. Ang (2007), Saboori et al. (2012). That is, environmental pollution levels increase as a country growth, but begin to decrease as rising incomes pass beyond a turning point. This hypothesis was first proposed and approved by Grossman and Krueger (1991). Dinda (2004) GDP per capita to CO2 emissions per capita has been identified in both the short-and longrun. However, Holtz-Eakin and Selden (1995) establish a monotonic rising curve and an N-3 shaped curve have found by Friedl and Getzner (2003). On the other hand, Richmond and Kaufman (2006) concluded that there is no significant relationship between economic growth and CO2 emissions.The second strand of researches focuses on the nexus between energy consumption and economic growth. This nexus suggests that higher economic growth requires more energy consumption and more efficient energy use needs a higher level of economic growth. Since the pioneer work of Kraft and Kraft (1978), Granger c...

Reassessing the Links between GHG Emissions, Economic Growth, and the UNFCCC: A Difference-in-Differences Approach

“…These include (but are not limited to) studies of: Austria [41,42]; Iceland [43]; India [44]; Japan [45]; Malaysia [46,47]; Thailand [48]; Turkey [49][50][51]; the United States [52]; the Middle East and North African (MENA) countries [53,54]; the ASEAN-5 countries [55]; and new European Union member and candidate countries [56]. What almost none of these studies explore, however, is whether increased stringency of environmental policy-as would have been encouraged under the KP-has had any adverse effect on economic growth.…”

Revisiting the Relationships Between Non-Renewable Energy Consumption, CO2 Emissions and Economic Growth in Iran

“…In the first strand of the literature, a high number of the existed literatures concentrated on one type or total amount of energy and investigate the linkage with economic growth and CO 2 emissions (Soytas et al 2007;Kasman & Duman 2015;Heidari et al 2015;Apergis & Ozturk 2015;Saidi & Hammami 2015;Akoena et al 2007;Niu et al 2011;Arouri et al 2012;Menyah & Wolde-Rufael 2010;Omri 2013;Baranzini et al 2013;Sadorsky 2011;Azlina & Mustapha 2012;Ozturk & Acaravci 2010). However, it should be mentioned that a number of the previous empirical studies (e.g.…”

“…Although, there have not been numerous studies focusing on this country, but some of the existing ones are as bellows: Omri (2013) . Their results showed a unidirectional Granger causality from GDP, oil and natural gas consumption to CO 2 emissions.…”

A Trivariate Causality Test: A Case Study in Cameroon

“…According to Ghosh [1] and Omri [2], there have been three streams of research to investigate the causal relationship between carbon dioxide emissions, energy consumption and economic growth. Investigating the causal relationship between economic growth and environmental pollutants constitutes the first stream of research.…”

“…Finally, the last stream of research has emerged in the recent literature, which combines two approaches earlier by examining dynamic relationship between CO 2 emis-sions, energy consumption and economic growth. The analysis of the causal relationship between CO 2 emissions, energy consumption and economic growth has been subject to many empirical studies [2] [8] [9].…”