What drives carbon dioxide emissions in the long-run? Evidence from selected South Asian Countries

Abstract

This study empirically investigates the relationship between CO2 emission and four of its potentially contributing factors (i.e., energy consumption, income, trade openness and population) using time series data from 1971-2013 on five selected economies of South Asia. After confirming that all the series are stationary using unit root test process, the study incorporates three different and advance panel cointegration tests i.e. Pedroni-Kao-and Johansen-Fisher-panel cointegration. All the panel cointegration tests confirm that all the variables cointegrated. The long-run association between the variables is checked using FMOLS-grouped and individual cross-section country in the panel. The FMOLS grouped results show that energy consumption, trade openness and population increases environmental degradation in the panel countries with exception of income which has negative impact and sounds the existence of Environmental Kuznet curve between income and emission. The innovative accounting approach using variance decomposition test and impulse response function is applied to examine the causality amongst the underlined vectors. The results show that there is bidirectional causality between energy consumption and trade openness and unidirectional causality running from energy consumption, trade openness and population to CO2 emission. The results enumerate that the energy consumption and population density will increase in long-run and foresee further environmental degradation in the region.

Effect of economic growth on CO2 emission in developing countries: Evidence from a dynamic panel threshold model

“…This is consistent with Aslanidis and Iranzo (2009) and Ahmed et al (2017) among others. Instead we observe a U-shaped relationship between economic growth and CO 2 emission whereby an increasing economic growth initially leads to declining CO 2 emission levels, reaches a threshold, beyond which increasing levels of GDP increases CO 2 .…”

“…Using data from 1971-2013 on five selected economies of South Asia, Ahmed, Rehman, and Ozturk (2017) explored the relationship between CO 2 emission, energy consumption, income, trade openness and population. All the panel cointegration tests (Pedroni-Kao-and Johansen-Fisherpanel cointegration) employed confirm that all the variables are cointegrated.…”

Environmental Accounting of Financial Development and Foreign Investment: Spatial Analyses of East Asia

“…Atici [16] conducted a similar analysis and concluded that with higher trade figures, emissions tend to increase in ASEAN countries, independent of whether the country is in a developed, developing, or late-developing state. Ahmed et al [17] mentioned that CO 2 emissions in South Asia are influenced by a variety of factors including trade openness, income, population, and energy consumption. They use panel data of five South Asian economies from 1971-2013 and prove a long-run cointegration between pollution and other mentioned factors.…”

“…In the Asian region, some studies have tested the effects of FDI, trade, and energy consumption on CO 2 emissions for the panel of Southeast Asian and South Asian countries ignoring the EKC hypothesis [15][16][17][18]. On the other hand, Le and Quah [3] investigate but could not find the evidence of the EKC hypothesis for the Asia and Pacific region.…”

The effect of energy and urbanisation on carbon dioxide emissions: evidence from Ghana

“…But relying on energy to achieve economic growth and development may come at a cost since energy is a major source of greenhouse gas (GHG) emissions, particularly CO 2 that deteriorate the quality of the environment. Consequently, the relationship between CO 2 , income and energy has been investigated by researchers (see Ahmed et al ., ; Kwakwa and Adu, ; Shahbaz et al ., ; Twerefou et al ., ). However, in recent times, researchers have also paid close attention to the emission effect of population indicators especially urbanisation.…”