Dynamic connection between energy prices, Malaysia's economic growth, and ecological footprint: An evidence from Morlet wavelet approach

Abstract

Using the Morlet Wavelet approach and other time‐frequency decomposition techniques, this study investigates the dynamic relationship between energy prices, economic growth, and ecological footprint in Malaysia from 1975 to 2021. Our analysis reveals several key findings. Firstly, despite the absence of oil price volatility, the size of Malaysia's ecological footprint varies significantly over the study period. Secondly, energy prices contribute significantly to the ecological footprint. Thirdly, the association between energy prices and ecological footprint is stronger during periods of economic growth. Lastly, energy prices contribute to economic growth and inflation in the short run, but after factoring in the ecological footprint, the association extends into the long run. These findings suggest that Malaysia's economic growth is driven not only by energy prices but also by its ecological footprint. Moreover, the size of Malaysia's ecological footprint is driven by factors at the microeconomic level rather than energy prices alone. Therefore, the impact of energy prices on the macroeconomy, especially when considering the impact on the environment, is non‐linear.

Environmental tax, renewable energy and environmental sustainability in Germany: evidence from wavelet and Fourier-based approaches

“…According to Torrence and Compo (1998) The periods were divided by the WPS, highlighting the very responsive degree present across the whole time series in all the time and frequency domains. The WC's special characteristics allow it to characterize a wide range of areas and periods when co-movements happen among the time series (Razi et al, 2023;Eweade et al, 2023). The WC coefficient is modified following Torrence and Webster (1999) below:…”