Autoregressive Distributed Lag Method Research Articles

Asymmetric impact of energy consumption & financial development on environment using ARDL approach: Case of ASEAN countries

Current research explores the adverse impact of energy consumption and economic development in the ASEAN region. The choice of the region stems from the fact that the human development index of the region ranges widely from 0.93 of Singapore to that of Myanmar, which is 0.58. besides that, the region's Ecological Footprint is increasing with time. Another aspect of the region stems from the fact that, on average, the region has had an ecological deficit since the 1970s. This research examines the origins of environmental degradation in South Asia by analyzing the lopsided impact of urbanization and economic expansion on economic growth and energy use. This study applies the non-linear autoregressive distributive lag (NARDL) method to examine the asymmetry that results from both the positive and negative disruptions of financial development and energy consumption, using an annual dataset spanning 1980 to 2021. According to the NARDL model's findings, both positive and negative shocks in energy consumption significantly contribute to increasing environmental degradation over the long run and decreasing the density of CO2 emissions in the short run. While several factors can cause short-term changes in CO2 emissions, only an adverse shift in financial development can have a lasting and major effect on global emissions. In addition, the ARDL model's findings suggest that less environmental deterioration occurs due to economic progress, but CO2 emissions increase due to rising energy consumption. This article argues that governments should try to achieve high economic success through energy consumption and economic growth that is less taxing on the environment.

ESG, innovation, and economic growth: an empirical evidence

Purpose This paper aims to examine the relationships among environmental, social and governance (ESG) practices, innovation and economic growth in five Asian countries from 1990 to 2020. Design/methodology/approach The study innovatively constructed the ESG index at the country level by using frequency statistics on text mining and factor analysis for each country over time. In addition, this study used the autoregressive distributed lag method to establish a long-term relationship. Findings The authors discovered that ESG practices among corporate entities significantly impact economic growth in Malaysia, the Philippines and Singapore. Specifically, the environmental component positively affects the growth of Malaysia, Thailand and the Philippines, while the governance components of ESG contribute to Thailand’s economic growth. The authors also discovered that innovation improves countries’ economic growth, thus offering policy insights into promoting ESG practices and stimulating the ecosystem for innovation. Originality/value The paper fills the gap left in previous inconclusive findings on the association between ESG practices and country growth.

Testing the asymmetric impacts of income inequality, financial development and human development on ecological footprint in Türkiye: A NARDL approach

This study aims to explore the asymmetric effects of income inequality, financial development, and human development on the ecological footprint in Türkiye between 1990 and 2021, as well as the symmetric impacts of energy consumption, economic growth, trade openness, and urbanization. The Nonlinear Autoregressive Distributed Lag method is employed to examine the short- and long-term relationships among the variables. This study distinguishes itself from previous research by examining the asymmetric effects of income inequality, human development, and financial development on the environment in Türkiye, where significant economic and social transformations have occurred in the past few decades and have had severe impacts on the environment. The study's key findings demonstrate that shocks in income inequality, financial development, and human development have significant impacts on the ecological footprint. Our findings indicate the importance of using disaggregated data in the analyses. The results related to control variables indicate that energy consumption and economic growth exacerbate ecological pressure, while urbanization mitigates it. These findings have significant implications for policymakers, who can achieve socioeconomic and environmental gains by addressing crucial issues such as green job creation, green technologies, green financing, and environmental education.

Socio-economic dimensions and human centricity in Industry 5.0: a study on manufacturing sectors in central and Eastern European economies

PurposeThis study aims to quantify the concept of Industry 5.0, with a focus on human-centricity in the manufacturing sector.Design/methodology/approachThe panel nonlinear autoregressive distributed lag method is applied to assess asymmetry and vulnerability in the food, textile, chemical manufacturing, high-tech and transportation sectors. The robustness of the results is tested using a panel Granger non-causality test and panel vector autoregressive models.FindingsThis study finds that financial unions, fair internal markets, gender and youth participation are significant factors for human centricity in the manufacturing sectors. The NARDL results suggest that both the chemical and high-tech industries human participation are insignificant in both the long run and short run. The results of the food industry are significant in both the sort run and the long run.Research limitations/implicationsManufacturing sectors need to create sustainable employment strategies that lead to stable, enduring and satisfying jobs in order to achieve human centricity. Involve skilled workers in important decision-making processes and empower them with technology.Originality/valueThis study differed from prior research in several ways. Firstly, it incorporates the social dimension as a control variable in the pursuit of I5.0 implementation across various manufacturing sectors. Secondly, it quantifies the human-centricity aspect of I5.0 within these sectors.

Study on agricultural water resource utilization efficiency under the constraint of carbon emission and water pollution

Agricultural water resource utilization efficiency in China is facing significant challenges due to the dual constraints of carbon emissions and water pollution. The inefficiency in water usage in agriculture not only impacts the sustainability of water resources but also contributes to environmental degradation through increased carbon emissions and water pollution. Agricultural water resource utilization efficiency under the constraint of carbon emission and water pollution has been a critical issue in China from 2005 to 2022. This study employs the Quantile Autoregressive Distributed Lag (QARDL) method to comprehensively assess and analyze the complex relationship that exists between agricultural water usage, carbon emissions, and water pollution. By analyzing distinct quantiles of the data distribution, the research investigates how different levels of water resource utilization efficiency relate to carbon emissions and water pollution under various conditions. The findings reveal nuanced insights into the dynamic interactions among these components within the agricultural sector. This research project focuses on the efficiency of water resource utilization in agriculture while considering the constraints of carbon emission and water pollution. Given the dynamic and time-dependent character of these components, the QARDL methodology makes it possible to get a detailed knowledge of how they interact within the framework of agriculture. The study aims to give significant insights and policy suggestions to improve agricultural practices while minimizing environmental concerns linked to carbon emissions and water pollution.

The Impacts of Financial Market, Trade and Economic Policy Uncertainties on the Import Performance of Advanced Economies

This study aims to examine the long-term and short-term diverse effects of economic policy uncertainty, trade policy uncertainty, and financial market uncertainties on the import performance of advanced economies. It employs the Pooled mean group autoregressive distributed lag (PMG/ARDL) method for the panel of 27 advanced economies using quarterly data from the first quarter of 1996 to the fourth quarter of 2020. The study's results reveal that local and global economic and trade policy uncertainties have significant adverse long-term effects on the import performance of advanced economies. Besides, financial market uncertainties negatively impact advanced economies’ imports in the long run. Nonetheless, the results imply that domestic economic and trade policy uncertainties positively affect imports in the short run. Moreover, the Dumitrescu-Hurlin (D-H) panel causality test indicated that bidirectional causality exists between financial market and trade policy uncertainty indicators and imports. However, unidirectional causality exists between economic policy indicators and imports. The results are consistent across different sensitivity analyses. Based on these findings, we propose policy implications to control economic, trade and financial market uncertainties and thereby alleviating their impact on the import performance of advanced economies.

Investigating the environmental Kuznets curve hypothesis with urbanization, industrialization, and service sector for six South Asian Countries: Fresh evidence from Driscoll Kraay standard error

South Asia is the most polluted region in the world and is struggling to deal with the effects of growing CO2 emissions and the ecological impact it has left. The region needs to identify the variables that are most effective in reducing pollution in order to achieve long-term sustainable growth. The current study aims to investigate the environmental impacts of the current and projected urbanization rate, the service sector, and the availability of natural resources to test the environmental Kuznets-curve (EKC) theory in six South Asian countries (SAARC). With cross-sectional dependence present, this research examines panel data from 1972 to 2021 using the newly developed Driscoll Kraay Standard Error (DKSE) approach. To check the robustness of DKSE estimation, the study employs a novel Cross Sectional Autoregressive Distributive Lag (CS-ARDL) method. The results of DKSE show that GDP significantly minimizes CO2 emissions in both the short and long run. At the same time, GDP2, urbanization, and the service sector increase CO2 emissions in the South Asian region. The DKSE estimator also shows that industrialization and abundant natural resources have insignificant impacts on CO2 emissions. Inconsistent with the EKC hypothesis, the findings show that higher economic growth leads to increased environmental pollution and CO2 levels. Meanwhile, the CS-ARDL analysis found that GDP and industrialization reduce CO2 emissions, while urbanization, GDP2, and natural resource availability increase CO2 emissions. This research emphasizes the need for establishing appropriate industrialization and urbanization strategies and promoting cleaner energy adoption to reduce CO2 emissions.

The impact of food production on ecological footprint in Turkey: an analysis across agriculture, livestock, and aquaculture

AbstractThe ecological footprint (ECF), which has been frequently examined recently, offers a comprehensive analysis of the environment and has started to be used in Turkey. However, although it is a significant area of study in the world, food production, that raise the ECF the most, has not been the subject of much research in Turkey. In the present analysis, food production’s impacts on the ECF in Turkey are analyzed with yearly statistics for the period 1961–2018. Within the frame of this analysis, both food production as a whole and agriculture, livestock, and aquaculture production, which are the components of food, were analyzed individually. In this context, four different models were constructed, and the Autoregressive Distributed Lag method was used to analyze. According to the outcomes of the analysis, food, agriculture, and livestock production raise the ECF while aquaculture production diminishes. The largest coefficient among the three sub-sectors belongs to the agriculture sector. In addition, while the use of fertilizers, agricultural land, GDP, population, and life expectancy at birth increases the ECF, the age dependency ratio decreases, and the effect of rural population differs in the models.

Impact of green technology and energy on green economic growth: role of FDI and globalization in G7 economies

With the increase in economic growth, the world is facing serious challenges concerning environmental sustainability. Hence, the green economic growth is imperative for sustainable and inclusive development. The objective of this study is to contribute to the existing literature about the factors that influence green economic growth. The study investigates the role of green technology, green energy, foreign direct investment, and globalization on green economic growth in G7 countries. The data of the study is collected from WDI, KOF Swiss Economic Institute, and OECD database and the data period ranges from 1995 to 2020. The existence of cointegration between the variables of the study was tested by Westerlund’s (Oxford Bull Econ Stat 69(6):709–748) cointegration test. Due to the presence of cross-sectional dependency, the study employed the cross-sectional autoregressive distributed lag (CS-ARDL) method to estimate the coefficients in the long and short run. The study also used a common correlated effect—mean group (CCEMG) estimator for robustness check. The findings of the study reveal that green energy and FDI positively contribute to green economic growth in the long and short run. The green technology also contributes positively to enhance green economic growth but only in long run. To accelerate green economic growth, G7 countries should incorporate policies promoting green energy and technology, while acquiring more foreign investments to ensure a sustainable development.

How do R&D and remittances affect economic growth? Evidence from middle-income countries

Sustainable development through technical progress for middle-income countries (MICs) is overlooked in growth allied studies. Despite their crucial role in alleviating poverty and resource shortages, MICs encounter challenges in global economic competition, driving persistent efforts to find practical solutions. Therefore, this study explores the integrated impact of R&D expenditure and remittances on economic growth in MICs. Using data from 25 MICs between 1996 and 2021, this study employs the “2nd generation unit root” and “panel autoregressive distributed lag (ARDL)” methods. The “feasible generalized least square (FGLS)” techniques and the “Dumitrescu-Hurlin (D-H)” causality test are employed to verify the robustness of the panel ARDL estimation. The Westerlund cointegration tests confirm a long-term cointegration between variables. The findings of the panel ARDL approach show that R&D expenditure and remittances positively and significantly influence economic growth. The robustness of the panel ARDL results is confirmed by the FGLS estimation, which produces similar outcomes. The outcomes from the FGLS and the ARDL methods are additionally validated by the D-H causality check. Therefore, encouraging R&D and remittances is crucial to accelerate middle-income nations' economic growth. The study reveals a novel mechanism of R&D expenditures, remittances, and economic growth in MICs, shaping their mutual influence on this economic landscape. The study supports middle-income countries' policymakers in creating effective policies for their financial institutions regarding R&D expenditure and remittances.

Foreign Financial Flows on Financial Efficiency in Sub-Sahara African Countries

The level of financial efficiency in Sub-Saharan Africa (SSA) remained low and incomparable to that of industrialized nations of the world, despite the supposed advantages of foreign capital inflows. This study examined the relationship between foreign financial inflows and financial efficiency in Sub-Saharan Africa against this backdrop (SSA). This study's specific goals are to look into how remittance inflows affected financial efficiency in SSA and how FDI inflows affected it as well. Out of 49 countries in Sub-Saharan Africa, 42 were chosen for the study using a purposive sampling technique and an ex-post facto research design. The study used pooled mean group, mean group, and dynamic fixed effects techniques to estimate the model parameters using panel autoregressive distributed lag (PARDL) methods of estimation. The findings revealed that remittance inflows have significant positive impact on the financial efficiency, while FDI inflows have insignificant influence on the financial efficiency. In addition, the combination of economic growth with remittance inflows yielded negative impact on the financial efficiency while the combination of economic growth with FDI inflows yielded a positive impact on financial efficiency. The study concluded that remittance and FDI inflows play vital roles in guaranteeing improvement in financial efficiency of Sub-Sahara African countries directly and indirectly through inclusive economic growth. The study recommended that financial openness policies, like removing restrictions and encouraging free flow of financial resources between entities in domestic economy and foreign economies to promote further foreign financial inflows and enhance further financial efficiency. It is also recommended that financial openness policy should be pursued alongside inclusive economic growth measures such as economic diversification policies.

Modelling the determinants of birth tourism demand: a time series analysis

ABSTRACT Birth tourism has been steadily rising in recent years as potential mothers travel across borders with the main purpose of giving birth. However, the economic reasons behind this form of tourism have not been adequately examined in the existing literature. This study explores the determinants of birth tourism by incorporating factors such as the average income of visitors, price level, exchange rate, and infant mortality while accounting for the potential impact of the Citizenship Amendment Act 2005 in New Zealand. The variables have been introduced into the model using a standard tourism demand framework and a new dynamic autoregressive distributed lag method has been used in the study. Ultimately, rising income of visitors and exchange rate are reported to boost birth tourism while rising price reduces birth tourism. The result also shows that the implementation of the Citizenship Amendment Act 2005 has no significant effect on birth tourism, which implies that monetary and financial considerations such as the income of tourists, price level, and exchange are the most important drivers of birth tourism in New Zealand.

Advocating green economy in India: The tug of war among income inequality, export diversification, and environmental quality

AbstractGlobally, most countries have shown strong commitments toward the attainment of sustainable development goals before 2023. Thus, this study focuses on analyzing such commitments toward the attainment of SDGs (7, 8, 10, and 13), respectively. The study evaluates the role played by income inequalities, export diversification, and economic growth in restoring a sustainable environment in India from 1970 to 2019. To achieve its objective, the study employed the novel Fourier autoregressive distributed lag (ARDL) method. Remarkably, the study utilizes the load capacity factor (LCF) as a unique indicator for environmental sustainability. The LCF, which takes into account both biocapacity and ecological footprint, is one of the most complete indicators of environmental quality to date. The study's findings revealed a long‐run relationship between the LCF and all the explanatory variables. According to the Fourier ARDL results, income inequality and renewable energy improve environmental quality. At the same time, economic growth and export diversification negatively impact the LCF in India both within the short and long‐run periods. Conclusion and policy prescriptions are included in the study.

Remittances, exports, ODA, and economic growth in Bangladesh: A time series analysis

ABSTRACT This empirical study has explored the symmetric and asymmetric associations among GDP, remittances, Official Development Assistance (ODA), and exports by employing both the Autoregressive Distributed Lag (ARDL) and the Non-Linear Autoregressive Distributed Lag (NARDL) frameworks from 1986–2021. The ARDL model has found the positive impact of ODA and exports on economic growth, whereas remittance has a negative impact on growth. The NARDL framework has also supported the findings of the ARDL method. This study also provides policy recommendations to help achieve steady economic growth in the context of Bangladesh’s economy.

Imported Inputs, Balance of Payments and Economic Growth: a model and a test on the case of Turkey

Several countries rely heavily on imported intermediate inputs for the manufacturing of their exported goods. Understanding the implications of this reliance on a country's growth performance is vital. To address this issue, we conducted an in-depth analysis using the multi-sectoral balance-of-payments constrained growth model with data from Turkey spanning 1970 to 2019. We used the autoregressive distributed lag method to estimate sectoral export, final import, intermediate goods import, and total import demand functions for five technology-based sectors. Subsequently, we calculated growth rates using the multi-sectoral balance of payments constrained growth models, factoring in the estimated income and price elasticities, as well as the respective sectoral shares in total exports, total imports, total final imports, and total intermediate goods imports. Our results demonstrate that the multi-sectoral balance of payments constrained growth model, which incorporates the impact of imported intermediate goods, successfully predicts Turkey's growth path. The findings indicate that structural changes in the production process and the use of imported intermediate inputs have a positive impact on exports. However, Turkey's significant dependence on imported intermediate goods during the production process leads to a decrease in the multi-sectoral balance of payments constrained growth rate.

Exploring the relationship between economic diversification and energy-related CO2 emissions in a petroleum-producing country

Purpose This study aims to quantify sectoral energy and carbon intensity, revisit the validity of the Environmental Kuznets Curve (EKC) and explore the relationship between economic diversification and CO2 emissions in Bahrain. Design/methodology/approach Three stages were followed to understand the linkages between sectoral economic growth, energy consumption and CO2 emissions in Bahrain. Sectoral energy and carbon intensity were calculated, time series data trends were analyzed and two econometric models were built and analyzed using the autoregressive distributed lag method and time series data for the period 1980–2019. Findings The results of the analysis suggest that energy and carbon intensity in Bahrain’s industrial sector is higher than those of its services and agricultural sectors. The EKC was found to be invalid for Bahrain, where economic growth is still coupled with CO2 emissions. Whereas CO2 emissions have increased with growth in the manufacturing, and real estate subsectors, the emissions have decreased with growth in the hospitability, transportation and communications subsectors. These results indicate that economic diversification, specifically of the services sector, is aligned with Bahrain’s carbon neutrality target. However, less energy-intensive industries, such as recycling-based industries, are needed to counter the environmental impacts of economic growth. Originality/value The impacts of economic diversification on energy consumption and CO2 emissions in the Gulf Cooperation Council petroleum countries have rarely been explored. Findings from this study contribute to informing economic and environment-related policymaking in Bahrain.

Government Expenditure and Economic Growth Nexus in Ghana

Purpose: Economic growth is widely regarded as a crucial indicator of economic advancement within a nation, as it has significant implications for the provision of state benefits, the improvement of living standards, and the generation of employment opportunities. The present study employed a time series analysis spanning from 1983 to 2018, focusing on Ghana, in order to comprehensively examine the diverse impact of both aggregate and disaggregated government expenditure and debt on the country's economic growth.
 Methodology: The study conducted initial examinations, including unit root tests, cointegration tests, and correlation matrices, to determine the statistical reliability and validity of the data series for the research. The long-run parameters were estimated using the two-stage least square regression method, the autoregressive distributed lag method, and the threshold regression method.
 Findings: Based on our research, it has been determined that government expenditure exerts a positive and statistically significant influence on overall economic growth. However, when examining the disaggregated effects, it becomes evident that consumption expenditure has a positive and significant impact on economic growth, whereas capital expenditure has a negative effect on economic growth.
 Unique Contribution to Theory, Practice and Policy (Recommendations): In relation to the prevailing economic conditions characterised by periods of prosperity or recession, it is evident that the government should prioritise its attention towards external debt rather than domestic debt during times of economic expansion. Moreover, during periods of economic downturn, it is imperative for the government to prioritise foreign direct investment as a means of financing its budget, rather than relying on debt

Environmental sustainability and green logistics: Evidence from BRICS and Gulf countries by cross‐sectionally augmented autoregressive distributed lag (CS‐ARDL) approach

AbstractThe logistics sector plays a crucial role in supporting various aspects of the economy, making it an essential part of a nation's development. However, this sector also contributes to environmental pollution through various emissions. The adoption of environmentally friendly logistics practices presents a promising solution to mitigate adverse environmental impacts. This study aims to investigate the influence of economic growth, green innovation, foreign direct investment, transport emissions, renewable energy, and trade openness on green logistics in both Brazil, Russia, India, China, and South Africa (BRICS) and Gulf countries from 1992 to 2020. This study used an advanced panel approach to obtain robust results, considering cross‐sectional dependency and slope heterogeneity. The cross‐sectionally augmented autoregressive distributed lag method was employed to analyze long and short‐run estimations. Our findings reveal that in Gulf countries, both transport emissions and foreign direct investment have a negative impact on green logistics. In the BRICS countries, economic growth, transport emissions, trade openness, renewable energy, and green innovation have a positive impact on green logistics. The study proposes several recommendations to improve logistics development in both groups of nations and promote sustainability. To achieve carbon neutrality, it is important to adopt green logistics, promote green investments, and support renewable energy, innovation, and sustainable growth.

Examining the Effects of Economic Policy Uncertainties on the Stock Market Index: Analysis by Nonlinear ARDL Method for G7 Countries

Uncertainties are important factors that influence the decisions made by societies. Economic uncertainties closely affect society’s consumption and investment behaviour. Rising stock markets increase investors’ confidence, resulting in more purchases and higher stock prices and, in this context, an increase in consumer spending. When stock prices decrease, company investments are also negatively affected as consumer spending declines. Thus, increases and decreases in stock prices affect the general economy as they affect business confidence and consumers. The study analyses the effect of uncertainty in economic policies on stock markets, leading to a decrease in investor confidence in the economy. Such effects in G7 countries were examined using the nonlinear autoregressive distributed lag (ARDL) model for the period 1998:M05–2020:M09. This method was able to capture symmetries and asymmetries in the relationship between economic policy uncertainties and the stock markets. The results showed that heightened uncertainty in economic policy in Japan has a significantly negative effect on the stock market index, but in Germany and Italy, it has a significantly positive effect. Rising interest rates have negatively affected the stock market index in the United States, Canada, Japan, Italy, and the United Kingdom. The increase in the industrial production index is positively related to the stock market index in the United States, Canada, Japan, Italy, and France. Additionally, uncertainties in economic policy have asymmetric impacts on the stock market index in the United States, Canada, Japan and Italy, and symmetrical impacts in Germany, France and the United Kingdom.

Interrogating the Asymmetric Impact of Exchange Rate on Agricultural Output in Nigeria

The agricultural sector is vital to the Nigerian economy. It serves several functions including food supply for the populace, a source of income for a sizable section of the domestic labour force, a supplier of raw materials for industrial production, and provision of foreign exchange revenues to the economy. However, due to the country’s abundance of natural resources like crude oil, the agriculture sector is vulnerable to the fluctuations in the exchange rate caused by international financial markets. This analysis looked at how changes in the value of the naira relative to dollar affects agricultural production. In order to contribute to the current body of literature for the time period between 1981 and 2021, this study employed the Dutch Disease Syndrome theoretical framework through the use of the non-linear autoregressive distributed lag (NARDL) method for Nigeria. This research shows that while the long-term effect of the exchange rate on agricultural output in Nigeria is symmetrical, the short-term effect is asymmetrical. However, in more specific terms, the symmetrical effect of the exchange rate in the long run revealed that exchange rate appreciation increased real agricultural GDP by approximately 8.8 percent compared to exchange rate depreciation which had only increased real agricultural GDP by 0.11 percent. Consequently, since exchange rate exerted positive impact on agricultural production in the long run, it is suggested that the Nigerian government explores the increased competitiveness of the agricultural sector in its economic diversification efforts. In other words, the agricultural sector could provide an avenue to expand the revenue base of the government, but for a more beneficial effect on the agricultural sector in particular and the economy in general, more focus should be placed on policies that would enhance appreciation of the Naira such as reducing imports of agricultural inputs and produce.