Common Correlated Effects Research Articles

Does tourism have an impact on carbon emissions in Asia? An application of fresh panel methodology.

This research investigates the effects of tourism, GDP per capita, renewable energy, energy intensity, urbanization, and population on the environment in 40 Asian countries. Data from 1995 to 2019 are used in this analysis. Slope heterogeneity (SH), cross-sectional dependency (CSD), and the combination of level and first differenced stationary are all addressed using a new cross-sectionally autoregressive distributed lag (CS-ARDL) model in this work. Using Westerlund's cointegration method, these variables can be connected throughout time. To validate the findings, both augmented mean groups (AMG) and Common correlated effect mean groups (CCEMG) were utilized. The study results indicate that tourism helps slow the degradation of the natural environment. CO2 emissions increase as a result of variables such as population growth, energy use, and economic development. Only tourism and renewable energy can help cut CO2 emissions. As a consequence, CS-ARDL results are supported by results from AMG and CCEMG tests. Policymakers may be encouraged countries to adopt renewable energy and foster the expansion of the sustainable tourism industry.

Influence of green financing, technology innovation, and trade openness on consumption-based carbon emissions in BRICS countries

The study explores the dynamic effects of renewable energy investment (green financing), green technology, and trade openness on consumption-based (trade-adjusted) carbon emissions in BRICS economies from 2000 to 2020. The study employs the cross-section autoregressive distributed lag method for empirical estimation to address slope heterogeneity and cross-sectional dependency issues in panel data. The findings exhibit that green financing and sustainable technologies mitigate consumption-based carbon emissions in the long-run, while trade openness contributes to emissions in BRICS countries. The short-run outcomes are compatible with long-run; however, the magnitude of long-run estimates is larger than the short-run. Moreover, the error correction term reveals a significant negative coefficient value, endorsing the conversion towards steady-state equilibrium with a 37% yearly adjustment rate in case of any deviation from equilibrium. The robustness of results is confirmed through augmented mean group and common correlated effect mean group. These findings imply that BRICS countries should encourage financing in renewable energy projects and allocate R&D investment to promote the adaptation of sustainable technologies. In addition, sustainable and green trade policies would help to curb trade-adjusted pollution.

Modeling Energy, Education, Trade, and Tourism-Induced Environmental Kuznets Curve (EKC) Hypothesis: Evidence from the Middle East

Global warming has become the main concern in the present world. This research takes a comprehensive look at the interconnections between tourism, gross domestic product (GDP), renewable energy, fossil fuels, education, trade, and carbon dioxide (CO2) emissions in the Arab Peninsula. Including these variables, the research also checks the environmental Kuznets curve (EKC) hypothesis by analyzing the top 10 tourist destinations from 1997 to 2019. Saudi Arabia, Qatar, the United Arab Emirates, Iran, Israel, Jordan, Bahrain, Oman, Lebanon, and Egypt round out the top 10 countries in Arab in terms of tourist arrivals. The paper uses a novel augmented mean group (AMG) model to explore the problems of slope heterogeneity (SH), cross-sectional dependence (CSD), and the combination of level and first-difference stationery. An association between these variables over time can be discovered using the Westerlund cointegration method. To certify the accuracy of the findings, the research used both the mean group (MG) and common correlated effects mean group (CCEMG). According to the research, the EKC does not exist in the most popular Middle Eastern travel destinations. This basically means that as money grows, environmental conditions will deteriorate. The findings show that tourism can help reduce environmental harm there. Indicators such as rising populations, increased energy consumption, and thriving economies all influence the rise of the environmental degradation level. Trade will also increase environmental deterioration. The only things that will help reduce CO2 emissions are tourism and renewable energy. Therefore, the MG and CCEMG results corroborate the AMG findings. Governments may push for the widespread use of refillable energy sources and the development of ecotourism. Therefore, policymakers in this country should rethink their tourism strategies and adopt one that places a premium on renewable energy sources and environmental protection.

Does governance play any role in energy transition? Novel evidence from BRICS economies.

Indubitably, energy transition, which is responsible for enhancing renewables in the energy mix, is considered one of the finest strategies for reducing non-renewable utilization and thus helping economies achieve sustainable development goals (SDGs). In this regard, technological innovation and good governance are not only helpful in stimulating green energy supply but also enhance the efficiency of resources to reach the goals. Along with it, diligent long-term policies are required to inculcate some progression in the achievement of SDGs for climate safety. Thereby, factors such as good governance, technological innovation, trade openness, and economic growth can be addressed in a single framework. To achieve the objective of the study, we employ second-generation panel estimation techniques that are robust to cross-sectional dependence and slope heterogeneity. Specifically, we apply the cross-sectional autoregressive distributed lag (CS-ARDL) model for short- and long-run parameter estimation. The main findings are that governance and technological innovation both positively and significantly influence energy transition in the long run and short run. Economic growth affects energy transition positively, but trade openness affects energy transition negatively, while CO2 emissions have no significant impact on energy transition. Robustness checks, the common correlated effect mean group (CCEMG), and the augmented mean group (AMG) all validated these findings. Based on the findings, government officials are recommended to strengthen institutions, control corruption, and improve the quality of regulations in order to enhance the contributions of institutions to the transition to renewable energy.

Economic prosperity, asymmetric natural resource income, and ecological demands in resource-reliant economies

This study extends the literature by examining the linear and nonlinear effects of natural resource income and the contribution of environmental demands to long-term economic growth in resource-reliant economies (RREs). Data was sourced from 45 RREs from 1970 to 2019 and processed using three novel methodological techniques: the heterogeneous mean group (MG), augmented MG, and common correlated effects MG. Empirically, the study affirmed asymmetry in the natural resources rents-economic growth nexus. Specifically, the study found that environmental demands and positive changes to natural resources income are a blessing to long-term economic growth. In contrast, adverse changes to natural resources income are growth decelerating. Globalisation and human capital development served as control variables, and while the former accelerated long-term economic growth, the latter had an irrelevant effect on the RREs. In addition, the Dumitrescu and Hurlin causality result showed a bidirectional nexus between environmental quality and economic growth and between economic growth and negative natural resource income changes. A unidirectional causal flow from positive natural resources income to economic prosperity and from the latter to human capital development was also revealed. The study proposed relevant policy measures.

Can environmental sustainability be decoupled from economic growth? Empirical evidence from Eastern Europe using the common correlated effect mean group test

The European Union (EU) and the Organisation for Economic Co-operation and Development (OECD) aim to develop long-term policies for their respective member countries. Having observed increasing dangers to the environment posed by rising economic growth, they are seeking pathways to enable policy action on economic growth and environmental sustainability. Given the facts in theoretical and empirical studies, this study assessed the validity of the decoupling hypothesis by investigating asymmetricity in the relationship between environmental sustainability and economic growth in nine Eastern European countries from 1998 to 2017 using the cross-section augmented Dickey-Fuller (CADF) unit root, panel corrected standard errors (PCSE), common correlated effect mean group (CCEMG), and Dumitrescu Hurlin causality approaches. Both population growth and drinking water are used as controlled variables. The outcomes establish strong cointegration among all the variables of interest. According to the results of CCEMG test, first, economic growth exerts short-term environmental degradation but has long-term environmental benefits in Eastern Europe; second, population growth and drinking water exert a positive effect on environmental sustainability in both the short- and long-run. The results of Dumitrescu Hurlin causality test indicate that environmental sustainability is unidirectionally affected by economic growth. Based on these outcomes, the following policy suggestions are made: (1) the EU and OECD should implement member-targeted policies on economic growth and fossil-fuel use towards regulating industrial pollution, water use, and population control; (2) the EU and OECD member countries should invest in environmental technologies through green research and development (R&D) to transform their dirty industrial processes and ensure productive energy use.

Modelling Sustainable Non-Renewable and Renewable Energy Based on the EKC Hypothesis for Africa’s Ten Most Popular Tourist Destinations

The main purpose of this study was to examine how tourism, GDP, renewable energy, and fossil fuels cause environmental damage. This study examined ten African countries between 1997 and 2021 to test the environmental Kuznets curve (EKC) theory. Egypt, South Africa, Kenya, Morocco, Tanzania, Tunisia, Mauritius, Ghana, Uganda, and Nigeria are the ten African countries with the most tourists. In this paper, the augmented mean group (AMG), mean group (MG), and common correlated effects mean group (CCEMG) models were used to deal with slope heterogeneity (SH), cross-sectional dependence (CSD), and a mix of first-differenced and level stationary variables. Though the inverted U-shaped exists, the findings are significant only for MG. The impact of renewable energy is favorable for the environment and significant for the AMG estimator. Inversely, impact of tourist arrivals and fossil fuels are detrimental for environment and significant. Based on the findings for each country, the tourism-based EKC theory only works for Kenya, Egypt, and Tanzania. The research found that using more renewable energy minimizes CO2 emissions more effectively in almost all countries except Morocco and Ghana. Ghana, Kenya, and Uganda’s CO2 emissions increase when more tourists come from other countries. For the sake of both tourism and the environment, the government must reconsider its tourism policies and implement ones that include renewable energy. The findings of this study assist in the transition to clean energy, aiding in sustainable tourism growth. As a result, selected countries should develop a new tourism plan that focuses on renewable energy sources and protects the environment.

Unleashing the influence of natural resources, sustainable energy and human capital on consumption-based carbon emissions in G-7 Countries

The nexus of natural resources and cleaner energy with carbon emissions or ecological footprint has been explored extensively; however, consumption-based carbon emissions (CBCE) are adjusted for natural resources, sustainable energy, and human capital have not been studied, though environmental deterioration primarily emanated from anthropogenic activities. Consequently, this research investigates the linkages between natural resources, sustainable energy, human capital, and CBCE in G-7 economies from 1976 to 2020 using a battery of advanced econometric statistical models. The empirical outcomes of this article, through the cross-sectional autoregressive distributive lag (CS-ARDL) model, estimate the short- and long-run findings, which explain that natural resources, cleaner energy and human capital preserve whereas urbanization exacerbates the environmental quality. More so, imports have a positive whilst exports bear a negative connection with CBCE in advanced countries. The results of the study are further validated by employing the Augmented Mean Group (AMG) and Common correlated Effects Mean Group (CCEMG) to obtain robust outcomes. In the end, policies that can improve sustainable development through key variables are discussed to provide inclusive recommendations for stakeholders to meet the carbon neutrality targets.

Does remittance inflow influence energy poverty?

Energy poverty is a relevant issue in Africa, driven largely by income constraints. Eliminating or reducing this phenomenon could prove very vital in achieving the United Nations’ Sustainable Development Goal 7 as well as sustainable development and inclusive growth. Remittances remain an important means of income support in developing and emerging economies. Even though remittance inflows to Africa have been rising significantly and are three-times higher than the official development assistance (ODA) inflows, it is still unclear how this income support system is impacting energy consumption and access to energy. This study investigates the short-run and long-run effects of remittances on energy poverty in both the strong form (multidimensional energy poverty) and the weak form (energy access and energy consumption). The study relies on an unbalanced annual panel dataset for 51 African countries from 1991 to 2017. The results of applying the dynamic common correlated effect pooled mean group instrumental variable (DCCE-PMG IV) estimator reveal that, for the weak form definition of energy poverty, remittances promote energy access and energy consumption mainly through the complementary channels of investment and consumption. The estimated mean marginal effects show that a one percent increase in remittance inflows will result in about 0.5 to 0.8 percent increase in electricity consumption when both complementary channels are considered. However, for the strong form definition of energy poverty, remittances reduce energy poverty, but little evidence is found on the complementary role of both investment and consumption activities. Thus, policies to reduce the cost of sending remittances and to target remittance-recipients' energy needs should be implemented to reduce energy poverty. Other policy implications are discussed.

Role of renewable energy and fiscal policy on trade adjusted carbon emissions: Evaluating the role of environmental policy stringency

There are scant empirical studies investigating the impact of fiscal policy and environmental policy stringency on consumption-based carbon emissions, especially within the context of the BRICS countries. To fill the voids in prior studies, the current study evaluates the effect of fiscal policy and environmental stringent policy on consumption-based carbon emissions. The study also incorporates other drivers of fiscal consumption-based carbon emissions (CCO2) emissions, such as disintegrated energy and economic growth, using data from 1990 to 2019. Since second-generation econometric methodologies such as augmented mean group (AMG) and common correlated effect means group (CCEMG) were used in the empirical research, this work presents trustworthy and solid empirical evidence. The quantile regression performs better when dealing with unobserved heterogeneity for each cross-section. Quantile regression gives more consistent and trustworthy results than traditional econometric approaches because heterogeneity and non-normality are identified in the dataset. The results from these estimators show that economic growth, nonrenewable energy, and government expenditure intensify CCO2 emissions while taxation revenue, environmental policy stringency and renewable energy mitigate CCO2 emissions. Furthermore, the panel causality test results show that taxation revenue, government expenditure, environmental policy stringency, and renewable energy can predict CCO2 emissions. Policy recommendations are put forward based on these results.

The effects of energy taxes level on greenhouse gas emissions in the environmental policy measures framework

Over the last decades, all countries have pursued an ambitious climate policy, thus showing a growing concern about climate change, global warming, greenhouse gas (GHG) emissions, or environmental taxes. Water, air, and soil pollution caused by gas emissions directly affect human health, but also the economies of states. As people’s ability to adapt to novel changes becomes increasingly difficult, globally, they are constantly trying to reduce their greenhouse gas emissions in a variety of ways. Environmental taxes, in general, and energy taxes, in particular, are considered effective tools, being recommended by specialists, among other instruments used in environmental policy. The aim of this research is to assess, empirically, the influence of environmental taxes levels on greenhouse gas emissions in 28 European countries, with a time span between 1995 and 2019. Regarding the empirical research, the proposed methods are related to Autoregressive Distributed Lag (ARDL) models in panel data and also at country level. At panel level, we used the estimation of non-stationary heterogeneous panels and also the dynamic common-correlated effects model with heterogeneous coefficients over cross-sectional units and time periods. The results obtained show that the increase in environmental taxes leads, in most countries, to a decrease in greenhouse gas emissions. To test the robustness of our results, we have included supplementary economic and social control variables in the model, such as gross domestic product (GDP), population density, exports, or imports. Overall, our paper focuses on the role of environmental policy decisions on greenhouse gas emissions, the results of the study showing, in most cases, an inverse impact of the taxation level on the reduction of gas emissions.

The prominence of fossil energy resources in ecological sustainability of BRICS: The key role of institutional worth

Introduction: The relationship between fossil fuel energy resources and environmental degradation has been quantified from theoretical and empirical perspectives. However, none of these studies has considered the conditioning role played by institutions in the nexus, especially for BRICS countries. Therefore, the current study examines the moderating role of institutional quality using annual data from 1996–2018 for BRICS countries.Method: The study employs the novel cross-sectional augmented autoregressive distributed lags (CS-ARDL) estimator, robust to cross-sectional dependency and heterogeneity, for short-run and long-run estimation. Moreover, augmented mean group (AMG) and common correlated effects mean group (CCEMG) estimators are used for robustness analysis.Results: The finding reveals that fossil fuel energy resources, globalization, and growth significantly positively affect the ecological footprint, whereas the institutional quality significantly negatively effects the ecological footprint in BRICS countries. Furthermore, the interaction term of institutional quality with fossil fuel energy resources significantly negatively moderates the fossil fuel energy-EFP nexus. Finally, we performed the Dumitrescu and Hurlin (DH) panel causality analysis to determine the causality direction between the variables. Except for intuitions quality and growth, we found a unidirectional causality for explanatory variables and EFP.Discussion: The study provides novel empirical evidence and recommends the importance of institutional quality for environmental sustainability.

Toward achieving zero-emissions in European Union countries: The contributions of trade and overseas direct investments in consumption-based carbon emissions

<abstract> <p>To achieve the ideal emissions reduction goals, several studies have suggested that carbon emissions should be examined in the framework of both territorial and consumption-based emissions. Nevertheless, the European Union (EU) SDGs targets aimed at mitigating carbon emissions based on the United Nation (UN) Kyoto Protocol structure, only appears to be concerned with the reduction of territorial-based emissions whilst emissions embodied on imported goods and services receive very little attention. To this end, this study examines the contributions of outward foreign direct investment (OFDI) and disaggregate trade flows toward consumption-based sustainability in twenty-one (21) EU countries for the period 1995–2019. The study utilizes the STIRPAT model (Stochastic Impacts by Regression on Population, Affluence, and Technology) and battery of advanced econometric techniques such as the Cross-Sectional Autoregressive Distributed Lag (CS-ARDL), Common Correlated Effects (CCE) and the Cross-Sectional Distributed Lags (CS-DL) to examine the short-and long-run dynamics of OFDI and trade on consumption-based emissions. Finding reveals that EU exports and OFDI spillover reduces consumption-based emission, whilst import of goods and services promote emissions both in the short-run and long-run. This suggests that the progress report on carbon emissions reduction for most EU countries under the greenhouse gas accounting systems are merely carbon emissions outsourced to low-income countries whilst consumption-based emission continues to increase. These findings are robust to several econometric problems with set of policy implications provided for policymakers and governments to formulate more efficient strategies toward the mitigation of consumption-based carbon emissions among EU countries.</p> </abstract>

How can environmental degradation and income disparities influence national health: an eye bird view on China's provinces.

Growing socio-economic disparity is a global issue that could disturb community health. Numerous case studies have examined the health influences of income disparities as well as the patterns that implicate those disparities. Therefore, this study attempts to examine the core determinants of mortality rate, which are environmental degradation, green energy, health expenditures, and technology (ICT) for the 25 provinces of China over the period of 2005-2020. This study uses a series of estimators to investigate the preferred objectives in which CS-ARDL and common correlated effect mean group (CCE-MG). Estimated results show the significant contribution of environmental deterioration and income inequality to the mortality rate. Furthermore, health expenditures, ICT, and green energy significantly reduce the mortality rate. Similarly, the moderate effect of income inequality on health expenditure, green energy, and ICT significantly reduces the mortality rate in selected provinces of China. More interestingly, the current study suggests policy implications to reduce the rising trend of mortality rate.

Renewable and Non-Renewable Energy Consumption on Economic Growth: Evidence from Asymmetric Analysis across Countries Connected to Eastern Africa Power Pool

Though various studies have examined the energy-growth nexus, the non-linear asymmetry relationship between economic growth and energy use has received little attention. In order to investigate the stratified asymmetric relationship between total, renewable, and nonrenewable energy consumption and economic growth in nine Eastern African nations connected via the Eastern Africa power pool (EAPP) and power trade (EAPT), this study used common correlated effect means group (CCEMG), nonlinear Autoregressive Distributed Lags (NARDL) approaches, and asymmetric causality tests from both a country and regional perspective. The time span is 1980 to 2017. The results from cross-sectional dependence confirms the existence of cross-sectionally dependence, findings from unit root and westerlund cointegration agreed the presence of long-run relations between variables and support the use of NARDL. CCEMG results reveal that energy in total contributes to growth, while nonrenewable energy reduces economic growth across the panel of selected countries. Nonlinear results from positive and negative shocks to energy as total, renewable and nonrenewable energy use have mixed nonlinear effect (positive and negative) on economic growth in long-run across the selected countries, while symmetric effect was unavailable in several countries. Bi-directional causation was noted between growth and all considered energy types at the panel of seven countries, and between energy as total and nonrenewable and growth in Ethiopia and Sudan, while all of the examined nations showed a strong one-way causal relationship between growth and renewable and nonrenewable energy, Rwanda showed a neutral relationship between growth and energy sources. For sustainable economic growth, policymakers, investors, and government officials may use this information to help them develop energy policies that promote renewable energy output while reducing reliance on nonrenewable energy in the region.

Evaluating low-carbon economic peer effects of green finance and ICT for sustainable development: a Chinese perspective.

With the adoption of the United Nations Sustainable Development Goals and the Paris Climate Agreement, ADB's involvement should not be ignored. The Global Environment Facility (GEF) and ADB have teamed up to provide climate change financing for developing countries. Included in this is climate protection finance, the financing method that offers cash to assist the region in achieving ecological responsibility. Using a systematic framework, the researchers in this study examined the rationale for building a cohort result of green management in China in the new phase of the country's development. As part of a multiplicative framework, the long-term correlation between variables is quantified using the dynamic common correlated effect (D-CCE) and interactive fixed effect. According to the findings, renewable energy and green financing are good environmental indicators. Environmental degradation is negatively affected by green governance. Some people are concerned about how to dispose of ICT, yet on the other side, ICT can help cut carbon emissions with new clean technologies. Moreover, the findings show that urbanization and per capita income increase carbon emissions. The results suggest that Chinese officials need to support reducing carbon emissions through the development of ICT infrastructure, green financing, and renewable energy.

The roles of energy, natural resources, agriculture and regional integration on CO2 emissions in selected countries of ASEAN: does political constraint matter?

This paper empirically examines the effects of energy, natural resources, agriculture, political constraint and regional integration on CO2 emissions in four ASEAN (Association of Southeast Asian Nations) countries of Cambodia, Malaysia, Indonesia and Thailand. We distinguish between renewable and fossil fuel energy consumption to see their individual impacts on CO2 emissions. The study employed a panel data from 1990 to 2019 derived from sources such as World Development Indicators, which were then analysed using Common-Correlated Effect Mean Group (CCEMG) and Augmented Mean Group (AMG) estimates. The findings show that renewable energy consumption has a negative impact on CO2 emissions while fossil fuel energy degrades the environment. The role of natural resources was found to be favourable for environmental quality with the impact of agriculture being found to be detrimental. For regional trade integration, its influence was not significant enough to offset CO2 emission. Furthermore, we discovered that political constraint induces CO2 emission. Based on the result, it is recommended that the selected ASEAN countries promote the use of renewable energy and clean technologies in their manufacturing processes, conserve natural resources, adopt eco-friendly political policies and intensify regional integration to accelerate the achievement of the SDGs.

Does economic policy uncertainty drive outbound tourism expenditures in 20 selected destinations?

Across several destinations, tourism receipts and the aspects of tourism industry has continued to influence the quality of life of the people as well contributing to the national development and sustainable growth. However, the uncertainties and risks experienced in the tourism industry and other economy sectors have remained the drawback of most economies and destinations. As such, the panel of 20 selected destinations is investigated via the common correlated effect method to examine the nexus of economic policy uncertainty and tourism development over the period 2001-2017. Interestingly, the result established a long term relationship between the economic policy uncertainty index and outbound tourism expenditures. Specifically, the finding revealed that outbound tourism expenditures are affected negatively by the rise of uncertainty in economic policies, thus suggesting instability of economic-related policy is the bane of tourism development in the destinations. This result stands to have important policy guide for especially for tourism-related activities in the panel of 20 selected countries.

Does industrial up-gradation, environment regulations, and resource allocation impact on foreign direct investment: Empirical evidence from China.

Because of China's tremendous increase in foreign direct investment (FDI) over the past two decades, this method of internationalization has become increasingly significant for companies worldwide. Heavy industry's dominant role in China's industrial structure must be modernized to ensure the country's long-term growth and prosperity. There are 30 provinces in China covered by this dataset, which dates back from 2005 to 2018. Augmented mean group (AMG) and common correlated effects mean groups (CCE-MG) estimations demonstrate that China's industrial upgrading and resource allocation considerably impact FDI inflows. The findings show that FDI inflows appear to be negatively affected by environmental rules. The results show that industrial upgradation and environmental regulations have not had the expected effect on FDI in China without the participation of other stakeholders. For the selected panel, the results from the control variable show that population aging reduces foreign direct investment inflows, whereas, economic growth increases FDI inflows. According to our findings and those of the empirical study, we make some policy proposals to help Chinese provinces attract more foreign direct investment by encouraging and upgrading the screening of such investments.

Revisiting the impact of financial development on income inequality and poverty reduction: empirical evidence from selected sub-Saharan African countries

PurposeThis paper aims to investigate the effects of financial access, financial depth, financial efficiency and financial stability pillars on income inequality and poverty among a panel of sub-Saharan African (SSA) countries.Design/methodology/approachThis paper captures cross-sectional dependence among the income groups through the dynamic common correlated effect approach for a data set of 28 selected SSA countries from 2000 to 2017.FindingsThis study reveals that the financial development pillars exert positive and significant impacts on income inequality across the income groups. The results show that the effects of the financial development metrics on poverty are different across the income groups. The results also indicate that the pillars improve poverty reduction for low- and lower-middle-income countries. However, there is a minimal effect on poverty reduction in upper-middle-income countries. The differences among these income categories suggest the need for policymakers to account for income levels when prescribing policies that could engender financial development and poverty reduction in the region.Originality/valueThis paper examines the effects of financial development on both income inequality and poverty by using the newly developed World Bank financial development strategic metrics. It captures cross-sectional dependence in the full sample of selected SSA countries and their income categories.