ARDL Analysis Research Articles

Does economic policy uncertainty, nuclear energy, and crude oil influence CO2 emissions? A sectoral growth analysis on G20 countries.

The G20 nations collectively accounted for a significant portion of global CO2 emissions due to their vast economies and rising energy demand. While some G20 nations have made substantial efforts to reduce their emissions through policies such as renewable energy incentives and carbon pricing, others may still heavily rely on fossil fuels for energy production and industrial processes. Therefore, this recent study endeavoured to investigate the relationship between nuclear energy consumption (NEC), crude oil (CO), and economic policy uncertainty (EPU) with CO2 emissions in three economic sectors of G20 nations. Despite voluminous research work conducted on mitigating CO2 emission, to the best of our understanding, this paper marks the inaugural endeavour to investigate the impact of the afore-mentioned variables in a three-sector model with emission across G20 countries. To achieve this objective, we carried out a range of examinations, encompassing panel unit root and cointegration tests, followed by panel DOLS, ARDL, and the Dumitrescu-Hurlin causality test, spanning the period from 1990 to 2022. The findings trace that agricultural growth reduces CO2 emissions, while manufacturing and service sector growth increases CO2 emissions in both the short and long run. The panel ARDL analysis shows that CO leads to an increase in carbon emissions in the short term, whereas NEC contributes to a reduction in emissions. In terms of the synergy between NEC and EPU, it is noteworthy to mention that the collective impact of increase in NEC and decrease in EPU reduces the emission in three sectors. Nevertheless, in the long term, EPU exhibits a negative correlation with emissions across three sectors. Hence, the current research proposes waning EPU as a deliberate strategy to reduce emissions under careful consideration of its potential effects and feasibility within broader economic and policy contexts.

Impact of Macroeconomic Variables and Mortality Rates Under 5 on CO2 Emissions: A Case Study of Lithuania

This study examined how Lithuania’s CO2 emissions were affected by macroeconomic variables and mortality rates between 1995 and 2020. ARDL analysis, cointegration regression, diagnostics test, and robustness test were used to quantify the impact of mortality rates, macroeconomic variables, and CO2 emissions. The findings of the unit root test confirmed that all variables are stationary. Similarly, the ARDL bound test values show that the variables are cointegrated and that a long-run relationship exists between them. However, the ARDL methods both showed that mortality rates, trade openness, and economic growth have a significant positive impact on CO2 emissions. Hence, renewable energy consumption helps reduce CO2 emissions. Furthermore, diagnostic tests confirmed no serial correlation, no heteroscedasticity exists, and robust tests also show that the model is stable. While cointegration regression results are similar to the ARDL model test. The study analysis suggests the essential policy recommendations aimed at reducing CO2 emissions and the need to improve health sectors (specifically, mortality rates under 5). This study expands the existing literature on environmental economics, and its findings will help improve policy and frameworks in Lithuania to reduce carbon emissions.

Relationship between Oil Exports, Renewable Energy Consumption, Agriculture Industry, and Economic Growth in Selected OPEC Countries: A Panel ARDL Analysis

Relationship between Oil Exports, Renewable Energy Consumption, Agriculture Industry, and Economic Growth in Selected OPEC Countries: A Panel ARDL Analysis

Measuring How AI Innovations and Financial Accessibility Influence Environmental Sustainability in the G-7: The Role of Globalization with Panel ARDL and Quantile Regression Analysis

This study investigates the impact of AI innovation on environmental sustainability in the G-7 region from 2010 to 2022. Additionally, it tests the Load Capacity Curve (LCC) hypothesis in relation to financial accessibility, globalization, and urbanization. Cross-sectional dependence and slope homogeneity tests reveal the presence of cross-sectional dependence and heterogeneity issues. Panel unit root and panel cointegration tests confirm that the variables are free from unit root problems and are cointegrated in the long run. To identify significant factors influencing environmental sustainability, this study employs Panel ARDL and Quantile Regression methods. Both methods confirm the LCC hypothesis in the G-7 region, demonstrating a U-shaped relationship between income and the load capacity factor. The results indicate that AI innovation and financial accessibility are significantly positively correlated with the load capacity factor, while globalization and urbanization are negatively correlated, leading to lower environmental sustainability. To validate the robustness of the Panel ARDL and Quantile Regression results, Driscoll-Kraay standard errors, Augmented Mean Group, and Common Correlated Effects Mean Group estimation approaches are applied, all of which support the initial findings. Furthermore, the D-H causality test reveals unidirectional causality from economic growth, financial accessibility, globalization, and urbanization to the load capacity factor, and bidirectional causality between AI innovation and the load capacity factor.

Exchange rate fluctuations and industrial production in Malaysia: evidence from dynamic simulated ARDL analysis

Contemporary literature argues that the exchange rate serves as an important instrument of industrial policy to boost economic growth. However, it is difficult to design effective exchange rate policies owing to the uncertainty shrouding the outcomes of the exchange rate movement for industrial growth. Therefore, this study uses a dynamic simulated autoregressive distributive lags approach to study the impact of positive and negative changes in the real effective exchange rate on industrial production of Malaysia for the period 1970–2022. We employ an extended production function to study this relationship by incorporating capital, labour and globalisation as additional explanatory variables. The findings suggest that positive (negative) changes in real effective exchange rate are followed by positive (negative) changes in economic growth in the long run. Furthermore, positive changes in capital affect economic growth positively and significantly in both the short and long run. Finally, positive (negative) movement in labour and globalization positively (negatively) and significantly affect industrial production in the long run respectively. Policymakers should depreciate currency to expand industrial production in Malaysia. Moreover, to boost industrial production, short-term loans should be introduced for capital accumulation.

Dynamic interactions between GDP, renewable energy, innovation, and CO2 emissions in Finland: a fourier-augmented ARDL analysis

This study uses the novel Fourier-augmented ARDL (FARDL) to explore the impact of renewable energy (REN), the number of patent applications (PA) and GDP per capita on CO2 emissions in Finland during 1990–2022. The findings reveal that in the long run, GDP rises CO2 emissions, while REN and PA decrease CO2 emissions. The FARDL short-run results indicate that both REN and PA have a significant negative impact on CO2 emissions, suggesting that higher adoption of renewable energy and technological innovation contribute to emission reductions. However, GDP does not show a significant effect in the short run, which may indicate a decoupling of economic growth from environmental degradation in the short term. Furthermore, the study highlights the need for policies that promote technological innovation and increased investment in renewable energy to achieve sustainable carbon reduction in the long term.

Impact of Digitalization on Economic Growth in Developing Countries: A Panel ARDL Analysis

The study aims to explore how digitization affects the economic growth of developing nations. It is theorized that emerging technologies are pivotal in influencing the economic landscape of developing countries. Key factors include improved communication facilitated by enhanced technology infrastructure, as well as the ability to reach a larger portion of the impoverished population previously excluded. The research employs a panel dataset spanning 24 years, from 2000 to 2023, covering 87 emerging economies. The Panel Autoregressive Distributed Lag (ARDL) methodology is utilized for the analysis. According to the research, taxes have a detrimental impact on economic expansion. At the same time, variables such as DI, GFCF, LFPR, and M2 have a positive effect on the economic growth of emerging nations. The research recommends that investments in digital infrastructure and technology utilization should be made to bolster the growth of developing countries. Increasing the Labor Force Participation Rate (LFPR) is essential for promoting job creation and entrepreneurial activities.

Determinants of carbon emissions in Kenya and policy implications

Carbon dioxide emissions are the primary greenhouse gasses behind global climate change and its associated effects. Climate change adversely impacts the environment, biodiversity, and human health. The ability to tame carbon dioxide emissions will help in the fight against climate change. However, the recent pace of rising carbon dioxide emissions raises concerns about winning the war against climate change. World leaders are determined to take actions that will lower emissions. Thus, there is a worldwide effort to achieve net-zero emissions. Consequently, it is crucial to comprehend the specific factors that contribute to carbon emissions of specific economies so that countries can develop and enforce effective strategies for reducing carbon output, mitigating the effects of climate change, and improving recovery programs. Despite many empirical studies conducted in Africa on the determinants of carbon emissions, the results remain inconclusive and inadequate, leaving a void for further research. This study seeks to fill this knowledge gap by modeling the relationship between Kenya's carbon emissions (which have been increasing since the early 2000s), and mobile technology adoption, renewable energy mix, tourism development, development assistance, income, and global financial crises, utilizing the most current data from 1995 to 2021 from the World Bank's database. The ARDL, FMOLS, CCR, and DOLS analysis results reveal that mobile technology, tourism, development aid, and global financial crises increase Kenya's carbon emissions in the long run. At the same time, income and renewable energy reduce short- and long-term impacts. The significant insight from these results is that enhancing renewable energy development, mobile technology, and development assistance can promote a sustainable environment. From these findings, the study proposes many policy recommendations to help decision-makers, communities, companies, and the government in Kenya allocate resources and implement resilience and mitigation policies and programs in the areas most susceptible to the effects of climate change.

Analyzing the environmental impact of fuel switching: Evidence from ARDL analysis for policy considerations

The rise in global temperatures, driven by increased CO2 levels, is a pressing concern. Developing nations like Malaysia face challenges in transitioning to cleaner energy due to resource constraints, making natural gas a crucial transitional solution. This study introduces the Fuel Switch Variable to analyze the impact of shifting fuel consumption patterns on CO2. Using data from 1980 to 2020 and the ARDL model, findings show that policies promoting natural gas over oil and coal reduce CO2 emissions, while economic and population growth increase emissions. Policymakers should incentivize fuel switching, enforce energy efficiency standards, and invest in new technologies.

Technological Innovation and Agricultural Productivity in Nigeria Amidst Oil Transition: ARDL Analysis

In contemporary discourse, Nigeria’s reliance on its oil sector is proving insufficient for sustained economic growth. The volatility of oil prices, geopolitical tensions, technological advancements, and environmental sustainability concerns have exposed the vulnerabilities of an oil-dependent economy, emphasizing the need for diversification and a renewed focus on agriculture. This study investigates the relationship between technological innovation and agricultural productivity in Nigeria, contrasting it with the oil sector. Using the ARDL estimation technique, our findings reveal a significant negative influence of immediate lagged agricultural productivity (AGTFP(−1)), indicating technological constraints. Technological innovation, proxied by TFP, shows a substantial impact on agricultural productivity, with a negative long-term effect (−90.71) but a positive, though insignificant, impact on agricultural output (0.0034). The comparative analysis underscores that the agricultural sector tends to benefit more from technological innovation than the oil sector. This highlights the critical need to prioritize technological advancements in agriculture to drive sustainable growth and economic resilience in Nigeria.

Unveiling the Dynamics: Exploring the Relationship between Emerging Stock Market Prices and Macroeconomic Factors through ARDL Analysis

This study investigates the interaction between stock prices and prices in other markets using a panel ARDL model. Analyzing data from January 2004 to December 2022 for 19 emerging market countries, the study explores the impacts of gold prices, exchange rates, inflation rates, and interest rates on stock prices. The results indicate a long-term negative relationship, except for gold, between the variables. The effects are generally insignificant in the short run, except for gold's negative impact. The global financial crisis of 2008 negatively affected emerging market stock markets in both the short and long term. In the short run, the COVID-19 pandemic negatively impacted stock market returns, which turned positive in the long run. This study highlights the importance of sound monetary policies focused on price stability and fiscal policies aimed at reducing government dominance in financial markets to foster long-term growth in stock markets.

Energy Consumption, Bank Credit and Manufacturing Industry Performance: A Panel ARDL Analysis in Western Indonesia

The energy growth nexus is still being debated due to mixed empirical findings. This study seeks to establish a relationship between energy consumption, bank credit, and the performance of the manufacturing industry. This study also aims to determine the pattern of the dynamic causal relationship between energy use, bank credit, and the performance of the manufacturing industry in 17 provinces in western Indonesia. This study used secondary data from the Central Bureau of Statistics and the Financial Services Authority. Panel data are from 17 provinces in western Indonesia, spanning from Q1 2010 to Q4 2022 (2010Q1–2022Q4). We employed the panel ARDL and causality test to explore the connection between the variables of interest. The panel ARDL confirms that energy consumption and bank credit play a crucial role in boosting the performance of the manufacturing industry in the long term. This study found strong evidence to support the long-term feedback hypothesis of the energy-output growth nexus. However, in the short term, bank credit was statistically insignificant at all confidence levels. We recommended several policies to local governments and stakeholders, prioritizing the provision of more adequate energy infrastructure and greater access for industrial businesses to utilize banking services. Advancing infrastructure and developing the utilization of new renewable energy are proposed to support sustainable economic development.

Impact of Natural, Physical and Human Capital Formation on Economic Growth in Pakistan: An ARDL Analysis

Attaining sustained economic growth is one of the key objectives of any country to improve the well-being of its people and strengthen its economic position in the world. Capital formation is one of the crucial factors of economic growth as it promotes productivity, efficiency, and higher output growth. Therefore, this paper intends to analyze the impact of natural, physical, and human capital formation on economic growth in Pakistan by employing annual time series data from 1971 to 2020. Different econometric approaches such as unit root test, bound test, and ARDL model are utilized to estimate the results. The study found that labor force participation rate, physical capital, human capital, natural capital, FDI, and financial development are positively associated with economic growth in Pakistan. Instead of FDI, all the variables are found to be significantly related to economic growth in Pakistan. Considering the study’s findings, it is concluded that capital formation is essential to progress the economy of Pakistan, so policymakers must concentrate on investing in physical infrastructure, improvement in health and educational facilities, and efficient utilization of natural resources to promote economic growth.

The influence of IFRS and institutional quality on economic growth: empirical evidence in the GCC countries using panel ARDL analysis

The influence of IFRS and institutional quality on economic growth: empirical evidence in the GCC countries using panel ARDL analysis

The Nexus Among Foreign Direct Investment, Economic Growth, and Country Risk: An Aggregated and Panel ARDL Analysis

ABSTRACT The purpose of this article is to investigate and analyze the relationship among FDI, economic growth, and country risk. Using a panel study, based on data from 131 countries spanning the period of 1995 to 2018, we find that investors prioritize risk perception over economic profits. They tend to favor low risk countries with lower default risk, even if the expected return is also lower. Consequently, advanced countries with reduced default risk attract more capital inflows. Thus, advanced countries with lower default risk attract more capital, and the responses of FDI to the independent variables are rather short in nature.

Financial Development, Monetary Policy, and the Monetary Transmission Mechanism—An Asymmetric ARDL Analysis

This paper’s objective is to examine the asymmetric cointegration and asymmetric effects of financial development and monetary policy on monetary transmission mechanisms in the Nigerian context using annual data spanning the period from 1986 to 2023. This study pushes the frontiers of knowledge by providing information on the nonlinear impacts of monetary policy and financial sector innovations on monetary transmission mechanisms in Nigeria to help policymakers tailor their strategies to local conditions, enhancing the effectiveness of monetary interventions in the economy. To achieve this, this paper adopted nonlinear ARDL models to understand how changes in the direction of monetary policy and developments in the financial system induce changes in the transmission of monetary policy. The findings document the existence of asymmetries in both the short and long run, revealing that the impacts of financial development and monetary policy on the different monetary policy channels are not uniform. These asymmetries indicate that the responses of various economic variables to monetary policy actions differ depending on the level of financial development. These findings underscore the complexity of the monetary transmission mechanism and the necessity for a nuanced understanding of how financial development and monetary policy interact in different contexts. Consequently, this finding is symptomatic of some characteristics of those financial markets on their way toward advanced developments. As the financial system matures, monetary policy may have a greater impact on the cost of short-term funding for banks without having any discernible effect on the rates at which businesses and households access funding. Therefore, this paper recommends focusing on the policies that will foster the financial system across the banking sector, capital market, bond market, and overall financial sector to improve the efficiency of the monetary transmission process.

Towards the vision of going green: The role of different energy research and development investments, urbanization and income in load capacity factor

Environmental sustainability, one of the agendas of the 21st century, is an essential step in the transition to a low-carbon economy in developing countries. The motivation of this study is to investigate the impact of fossil energy research and development investments on environmental quality within the framework of the load capacity curve hypothesis, and urbanization is also added to the model to avoid omitted variable bias. To this end, the Augmented ARDL analysis examines the relationship between economic growth and ecological well-being in Turkiye from 1986 to 2022. The results from the empirical analysis support the accuracy of the load capacity curve hypothesis. Furthermore, it is observed that renewable energy research and development investments, which are the main component of the study, improve environmental quality.On the other hand, it has been found that research and development investments in fossil fuels and urbanization reduce the load capacity factor. Based on the study’s findings, the Turkish government should allocate more research and development budget to transition to a low-carbon economy. Considering Turkiye’s intense fossil resource consumption, the government should plan research and development budget arrangements supported by law regarding energy efficiency.

Dynamics of economic growth in ASEAN-5 countries: a panel ARDL approach

This research explores economic growth dynamics in five ASEAN countries (1980–2020), analyzing the short and long-term impact of financial development (FD), oil prices, investment (INV), and inflation on GDP growth. Panel ARDL analysis reveals a transient positive link between FD and long-term GDP growth, necessitating a holistic approach for short-term stability. Similarly, oil prices exhibit long-term volatility, urging diversification strategies. In contrast, consistent and significant relationships exist between INV and GDP growth in both time frames, underscoring investment's pivotal role. The study emphasizes managing inflation for sustained growth, offering vital insights for policymakers, economists, and analysts in fostering ASEAN's economic stability.

Renewable, Non-renewable Energy Consumption and Economic Growth in South Africa: Fresh Evidence from ARDL and Wavelet Coherence Analysis

Renewable, Non-renewable Energy Consumption and Economic Growth in South Africa: Fresh Evidence from ARDL and Wavelet Coherence Analysis

Will the US Dollar Hegemony as the World Reserve Currency Be Replaced? An Exploratory Study

Abstract The understanding of the behavioral economics of how the US$ has been performing as an international reserve currency since 1945 seems to face a serious threat posed by the BRICS coalition nowadays. The study aimed to assess the long-term stability of the US dollar as an international reserve currency in light of the emerging challenge from the BRICS coalition. The research used ARDL and ECM analysis to address two main questions. First, the study confirmed that the US dollar’s long-term equilibrium as a reserve currency is stable. Second, it found that the US economic and monetary infrastructure appeared more resilient than that of the BRICS countries. This suggests that a shift away from the US dollar as a world reserve currency is not likely in the near future. The study also raised the need to consider designing a better monetary system for the modern world.