The Influence Relationship Between Climate Change and Economic Growth: Linear and Nonlinear Granger Causality Analysis for Nigeria.

Abstract

Recently examining the role of climate change in economic growth has gained considerable attention among scholars. In doing so, they usually employed CO2 emission or the temperature level as proxies of climate change. With this in mind, we empirically revisit the linear and nonlinear causal relationships amid climate change and economic growth using both of these indexes for Nigeria. For the nonlinear consideration, in addition, application of granger test for linear and nonlinear causality, we also benefit from bias-free methodology of nonparametric test using Granger causality. The standard causal linear tests do not discover any causative flows between the series under examination. Yet, we show that among the variables there exist nonlinear processes. Hence, these results are not well grounded due to the inability of the direct causality test to capture the inventive phenomena in the data. However, according to Granger causality test a nonlinear unidirectional evidence of causality that affect the economic growth to CO2 emissions was found to be unidirectional while for a temperature – growth nexus a bidirectional causal link was detected. Keywords: Economic Growth, CO2 Emissions, Climate Change, Nonlinear Granger, Nigeria, JEL Codes: O11, Q54, C54