Impact of Trade Openness on the Consumption of Fossil Fuels in Latin American and Caribbean Countries

Abstract

AbstractThis chapter investigates the impact of trade openness on the consumption of fossil fuels for a panel of 14 Latin American and Caribbean (LAC) countries over the period from 1990 to 2014. The panel autoregressive distributed lags (PARDL) and panel non-linear autoregressive distributed lag (PNARDL) were used in this investigation. The empirical results indicated that economic growth and trade openness contribute to increased consumption of fossil fuels in the LAC countries. However, the impact of renewable energy consumption is statistically significant at 1% and 5% levels, thus contributing to decreasing fossil fuel consumption. The error correction model (ECM) term is negative and statistically significant at the 1% level.KeywordsData analysisEconometricsEnergy economicsEnergyFossil fuelsLatin America and the CaribbeanMacroeconomicsTrade opennessJEL CodesE6F1Q40Q43