Cross-sectional Autoregressive Distributed Lag Research Articles

The impact of green finance, eco-innovation, renewable energy and carbon taxes on CO2 emissions in BRICS countries: Evidence from CS ARDL estimation

A sharp increase in economic and human development has multiplied the carbon intensity due to which there is a significant need of effective strategies in order to curb carbon emissions. Thus, the present study aims to examine the effective of green finance, eco-innovation, renewable energy output (REO), renewable energy consumption (REC), and carbon taxes on carbon dioxide (CO2) emissions in BRICS countries in the time of 2001–2020. Cross-sectional autoregressive distributed lag (CS ARDL) is used to test the connection among the variables. Empirical estimations of CS-ARDL approach validates the effectiveness of green finance, eco-innovation, REO, REC, carbon taxes, and industrialization as the relationship of these factors with carbon emissions is negative in nature in BRICS economies. Based on the evidences, the study recommends the formulation of environmentally friendly practices and advancement in green finances to mitigate carbon emissions.

Dynamic linkages between real exchange rates and real unit labour costs: evidence from 18 economies

ABSTRACT The article examines the long-run behaviour of real exchange rates based on the premises of classical political economy. Specifically, it investigates the dynamics between real exchange rates and real unit labour costs of tradable commodities for 18 developed and developing economies. The analysis is carried out by applying recent methods of panel data, while the short- and long-run dynamics are estimated based on the cross-sectional autoregressive distributed lag model. Our findings confirm the presence of short- and long-run effects of real unit labour costs on real exchange rates. Consequently, new and more effective foreign exchange rate policies may be designed.

Exploring the roles of natural resources on sustainability blueprint in G7 countries amidst green energy, technological innovation, and carbon‐tax intervention

AbstractToday's global economy faces the most devastating challenges of global warming occasioned by overdependence on natural resources. Besides, the dilemma of choosing between economic benefits and environmental costs emanating from natural resources heightens the empirical relevance of green energy in recent times. To solve this developmental puzzle, the current study presents extends the knowledge frontier by evaluating the impacts of natural resource dependence, green energy (captured by biofuels and renewable energy), carbon tax, and technological innovation on environmental sustainability in G7 economies. The empirical model endogenizes environmental policy stringency and financial development from 1996 to 2019. The empirical verification anchors on second‐generation estimators entailing Cross‐Sectional Autoregressive Distributed Lag (CS‐ARDL), Common Correlated Effects Mean Group (CCEMG), augmented mean group (AMG), and novel Method of Moment Quantile Regression (MMQR). The fallouts from the analyses uncover that natural resource dependence militates against the attainment of the sustainability blueprint by escalating the surge in CO2 emissions in G7 countries. Similarly, the feedbacks from financial development support the surge in emissions. On the flip side, green energy, technological innovation, carbon tax, and environmental policy appear as effective tools for mitigating the surge. The Fully Modified Ordinary Least Square (FMOLS) estimator for the country‐specific analysis corroborates the panel findings. Additionally, two channels of causalities, including unidirectional and bidirectional nexuses, are apparent from the estimated model. Policy measures are suggested based on empirical findings.

Renewable energy transition, resource richness, economic growth, and environmental quality: Assessing the role of financial globalization

This study investigates the impact of renewable energy transition, abundance of natural resources, financial globalization, and economic growth on the ecological footprint (EF) in G-11 countries under the Environmental Kuznets Curve (EKC) framework. In addition, this study further analyzes the moderating role of financial globalization in the nexus between renewable energy transition and EF. To do this, the study used the cross-sectional autoregressive distributed lags (CS-ARDL) for the short-run and long-run estimations, which allow heterogeneity in the slope parameters and dependency across countries. The results indicate that renewable transition and financial globalization are significantly and negatively related to ecological footprint, while natural resource rent positively impacts EF. Moreover, the findings further reveal that financial globalization impedes EF through the channel of renewable energy transition, and the robustness test also validates these findings. Our results confirm the presence of the EKC hypothesis for G-11 countries. In light of these findings, the study suggests that G-11 countries should adopt policies that enhance financial globalization along with renewable energy transition and redesign policies for sustainable utilization of natural resources in order to attain sustainable development goals.

Nexus of renewable energy output, green technological innovation, and financial development for carbon neutrality of Asian emerging economies

Following the Paris Climate Agreement (COP26), many governments have prioritized achieving zero carbon or carbon neutrality. However, traditional operational practices won’t permit businesses to tackle climate change issues, warranting organizational leaders to capitalize on the novel, eco-friendly operational tools and techniques. The current study examines the role of renewable energy output (REO), green technological innovation (GTI), and financial development (FD) in the carbon emission level of the four emerging Asian nations from 2010 to 2021. The study used the cross-sectional autoregressive distributed lags by employing a dynamic common correlated effects estimator to address the cross-sectional dependence problem, endogeneity, non-stationarity, and slope heterogeneity. The cross-section dependence, panel unit root, and augmented mean group tests corroborated the environmental Kuznets curve (EKC) hypothesis's accuracy for emerging economies in zero carbon. It proves that the REO, GTI, and FD significantly reduce carbon emissions and strengthen national capabilities to achieve the carbon neutrality goal. The findings suggest that capitalizing on and strengthening these factors and increasing investment in green recovery projects would assist nations in attaining a sustainable environment and reducing sectoral risks and carbon emissions for a sustainable and carbon–neutral society.

Does transport infrastructure make South Asian economies growth more inclusive? An application of a new transportation infrastructure index

Inadequate transport infrastructure in South Asian economies is one of the critical factors as this phenomenon hinders market competition due to the lack of goods transportation from urban to rural areas or vice versa. Given this, we solve the plausible research question of whether transport infrastructure development is adequate for inclusive growth in South Asian countries. This study contributes to constructing inclusive growth and transport infrastructure indices. However, this study measures transport infrastructure's impact on inclusive growth by applying the cross-sectional auto-regressive distributed lag model (CS-ARDL) approach from 1990 to 2020. Our empirical findings confirm that transport infrastructure significantly elevates inclusive growth by declining income inequalities in South Asian Economies in both the short and long runs. Finally, the two-way fixed effect with Driscoll and Ķraay standard error (DKSE), the dynamic ordinary least square (DOLS) and the fully modified ordinary least square (FMOLS) techniques are applied for the findings' robustness test. The results from the CS-ARDL method are consistent with the outcomes found from these three alternative parameters, i.e., DKSE, DOLS and FMOLS. Therefore, our findings suggest reinforcing the transport infrastructure to promote spectacular inclusive growth in South Asian countries.

Exploring the dynamic nexus between urbanization, energy efficiency, renewable energies, economic growth, with ecological footprint: A panel cross-sectional autoregressive distributed lag evidence along Middle East and North Africa countries

The release of greenhouse gases (GHG) is acknowledged as a serious hazard that fuels climate change (CC). The Middle East and North Africa (MENA) countries face particular environmental challenges due to its contribution to carbon dioxide emissions (CO2). There is, however, a scarcity of literature about the region's environmental challenges, despite its vulnerability to the consequences of CC. Therefore, the purpose of this research is to look at various solutions to the CC issue in the MENA area, that is, energy efficiency (EE), economic development, urbanization, fossil fuel (FF) usage, and renewable energies (RE). Further, the study seeks to evaluate CO2 emissions in the region by establishing a RE index. By applying the fresh technique known as the cross-sectional autoregressive distributed lag estimator to panel data for 18 MENA countries from 1990 to 2019, this study quantifies the impact of these variables on CO2 emissions. The findings reveal that the explanatory variables’ significance varies across regional panel clusters, with economic growth having a significantly positive effect on CO2 emissions in the long run. Moreover, the study rejects the Environmental Kuznets Curve hypothesis validation and highlights the importance of EE in boosting environmental quality in the long and short runs. Additionally, the outcomes suggest that RE contributes to reducing CO2 emissions, while the urbanization level and FF consumption adopted by MENA countries do not improve their environment. Thus, mitigating the negative consequences of CC in the MENA area necessitates encouraging EE and lobbying for a shift from FF to RE sources.

Climate change, institutional quality and food security: Sub-Saharan African experiences.

Studies in the past have interrogated the link between climate change and food security in general without giving attention to institutional quality as part of the strategic drivers. Thus, this study investigates the nexus of climate change, institutional quality and food Security in sub-Saharan Africa. To achieve the objective of this study, data were gathered from 26 selected African countries across Central Africa, East Africa, Southern African and West Africa regions. The data which comprised 16 variables spanned the period 1996–2020. After careful preliminary econometric procedures, the empirical models were estimated using Ordinary Least Square regression (OLS) and Cross Sectional - Autoregressive Distributed Lag (CS-ARDL) models designed to overcome the potential problems of cross-section correlation in the errors. Two models were estimated across the dimension of food availability and accessibility. The results from the estimation reaffirm the crucial role of climate change in sustainable food in the region. However, evidence revealed the negligible role of institutional quality in the attainment of food security. Thus, the study recommends that it is pertinent for Africa to adopt and domesticate initiatives to prevent climate change as part of the wider effort to guarantee food security in the region. Similarly, institutional quality should be re-positioned and refocused to be alive to the issue of sustainable food security as part of the effort to eliminate poverty in the region.

The Carbon Kuznets Curve in Africa: Do Energy Consumption and Governance Really Matter?

ABSTRACT: African countries suffer from the negative effects of climate change more severely compared to other continents, despite contributing only a small fraction of the global carbon emissions. This is attributed to at least three factors. First, Africa relies heavily on solid fuel energy sources to meet its socioeconomic needs. The use of solid fuels is associated with heavy pollution, which exposes the population to significant health risks. Second, environmental policy is less successful on the continent owing to the uncertainty caused by a lack of understanding of the scope of the environmental problem. Third, the African continent has become heedless about the consequences of climate change in its ambition for further growth to catch up with the rest of the world. In this study, we examined the roles of energy consumption and governance in explaining the carbon Kuznets curve hypothesis in African countries from 1995 to 2019. The empirical evidence provided is based on second-generation time-series analysis that accounts for cross-sectional dependency among the assessed factors. Specifically, the Westerlund cointegration approach, Cross-sectional Autoregressive Distributed Lag (CS-ARDL) simulation, Augmented Mean Group (AMG) method, and Dumitrescu and Hurlin heterogeneous panel causality tests were implemented. Together, these results confirm the validity of the CKC hypothesis for Africa. The mechanisms through which economic growth affects carbon emissions have been identified as energy consumption and governance. While it is possible to achieve a significant reduction in carbon emissions in Africa using environmental policy, there is a need to sacrifice growth to achieve desirable environmental quality. Governance arrangements need to be transparent and accountability regarding carbon regulations needs to be taken seriously. Promoting sustainable growth across Africa is important because it holds the key to accelerating global action. We recommend effective regulatory compliance monitoring and enforcement while reducing carbon emissions and advancing sustainable development through energy transitions.

The impact of geopolitical risk, governance, technological innovations, energy use, and foreign direct investment on CO2 emissions in the BRICS region.

Geopolitical risk (GPR) and other social indicators have raised many somber environmental-related issues among government environmentalists, and policy analysts. To further elucidate whether or not these indicators influence the environmental quality, this study investigates the impact of GPR, corruption, and governance on environmental degradation proxies by carbon emissions (CO2) in BRICS(Brazil, Russia, India, China, and South Africa) countries, namely Brazil, Russia, India, China, and South Africa, using data over the period 1990 to 2018. The cross-sectional autoregressive distributed lag (CS-ARDL), fully modified ordinary least square (FMOLS), and dynamic ordinary least square (DOLS) methods are usedfor empirical analysis. First and second-generation panel unit root tests report a mixed order of integration. The empirical findings show that government effectiveness, regulatory quality, the rule of law, foreign direct investment (FDI), and innovation have a negative effect on CO2 emissions. In contrast, geopolitical risk, corruption, political stability, and energy consumption have a positive effect on CO2 emissions. Based on the empirical outcomes, the present research invites the concentration of central authorities and policymakers of these economies toward redesigning more sophisticated strategies regarding these potential variables to protect the environment.

Investigating green energy–environment nexus in post‐COP26 era: Can technological innovation, financial development and government expenditure deliver Africa's targets?

AbstractGlobal warming remains one of the most topical issues in environmental debates because of its unimaginable ecological complications and threats to human existence. The determination to curtail the unwavering ravaging impacts of global warming motivates the 26th edition of the Conference of the Parties (COP26). Hence, this study examines explicitly how prominent factors discussed at COP26, such as technological innovation and green energy, will enhance the deliverance of the targets for Africa. While capturing environmental sustainability with CO2 emissions and ecological footprint, the empirical model endogenizes structural change, government expenditures and financial development from 1990 to 2018. The verification of stated hypotheses relies on the cross‐sectional autoregressive distributed lag (CS‐ARDL) model, augmented mean group (AMG), common correlated effects mean group (CCEMG) and method of moment quantile regression (MMQR) model. Our empirical results reveal that technological innovation, green energy and service‐led growth promote environmental sustainability by mitigating the surge in CO2 emissions and ecological footprint. Besides, government expenditures, financial development, agriculture and manufacturing hinder environmental sustainability. Policies that promote sustainable ecosystem in Africa are suggested based on empirical findings.

How human capital and energy prices play their role to enhance renewable energy: defining the role of innovations and trade openness in G-11 countries.

It is crucial to switch from nonrenewable energy to renewable energy sources to improve environmental quality. For this reason, innovations play a crucial part, yet the use of renewable energy is insufficient. This work contributes to the literature by Using both aggregate and disaggregated data, this study investigates the relationship between energy consumption, trade openness, human capital (HCA), and innovations in G11 nations. This study analyzed yearly data from 1990 to 2020 using empirical methods of augmented mean group (AMG) and cross-sectional autoregressive distributed lag (CS-ARDL) techniques. The findings highlight the significance of human capital, energy pricing, and innovations in fostering the growth of renewable energy in G-11 nations. A 1% increase in GDP and trade openness will enhance total energy consumption by 0.47% and 0.07%. GDP and trade are also increasing non and renewable energy consumption. A 1% increase in human capital and eco-innovations are increasing renewable energy by reducing non-renewable energy consumption. In addition, the G-11's rising commerce and GDP have increased their reliance on energy sources that rely on fossil fuels. The authors of this study suggest raising HCA as a means of encouraging the G-11 to use cleaner forms of energy. The need to bolster renewable energy to achieve a cleaner environment in the G-11 countries.

Does green manufacturing technology innovation decrease energy intensity for sustainable development?

Considering that the global manufacturing sector is partially to blame for climate change, and in light of the ongoing effort to achieve carbon neutrality, green manufacturing technology innovation seems to be the sure way to alleviate climate change and achieve sustainable development. By employing a cross-sectional autoregressive distributed lag (CS-ARDL) methodology to a panel dataset comprising 17 manufacturing sectors from 42 economies between 2000 and 2014, our study reveals the effect of green manufacturing technology innovation (GMTI) on energy intensity (EI). The findings show that: (1) GMTI decreased EI, and robustness tests indicate that the results are robust. (2) GMTI decreased EI in both the short- and long terms. Specifically, the long-term effect exceeds the short-term effect. (3) Heterogeneity analysis indicates that the effect of GMTI varies between regions. That is, GMTI decreased EI in developed economies in both the short and long term, while GMTI decreased EI only in the long term in developing economies. (4) Furthermore, the GMTI types showed that: (i) incremental GMTI had a more significant impact on EI in the short term compared to creative GMTI, whereas (ii) creative GMTI had more impact on EI in the long term than incremental GMTI. Consequently, relevant policy actions are proposed according to the results of our study to ensure that manufacturing sectors are progressing in the right direction to achieve sustainable economic development.

How institutional quality and renewable energy interact with ecological footprints: do the human capital and economic complexity matter in the Next Eleven nations?

Changes in the economy and human conduct have contributed to one of today's most urgent challenges: environmental pollution. This study's overarching objective is to evaluate the following Next Eleven nations (N-11) ecological footprints (EF) with their natural resources (NR), economic complexity (EC), renewable energy (RE), and foreign direct investment (FDI). The data from 1995 to 2018 are used with the panel data estimations. The complexity of an economy is found to influence the EF. For this purpose, the cross-sectional autoregressive distributed lag method is appropriate. The analysis shows that a higher degree of economic complexity was associated with a larger ecological impact. Moreover, this correlation was the highest among all the variables considered. However, the consumption of natural resources and the economies' complexity enhance environmental conditions. The key recommendation from the study's conclusions is to improve R&D activities to build environmentally friendly technology and clean energy infrastructures and to change to a clean industry pattern. Meanwhile, strategic initiatives are offered to legislators depending on the stability of institutional quality.

The potency of natural resources and trade globalisation in the ecological sustainability target for the BRICS economies

The BRICS nations have yet to significantly contribute to achieving Sustainable Development Goals (SDG) 7 and 13. Dealing with this problem might necessitate a policy shift, which is the main topic of this research. Therefore, the current study scrutinizes the interrelationship between natural resources, energy, trade globalisation and ecological footprint using panel data from the period between 1990 and 2018 for the BRICS nations. To assess the interrelationship between ecological footprint and its determinants, we used the Cross sectional autoregressive distributed lag (CS-ARDL) and common correlated effects. mean group (CCEMG) estimators. The findings show that economic progress, and natural resources lessen ecological quality, while renewable energy and trade globalization improves ecological quality in the BRICS nations. Based on these results, the BRICS nations need to upgrade their use of renewable energy sources and improve the structure of their natural resource endowments. Furthermore, trade globalisation necessitates immediate policy responses in these nations since it reduces ecological damage.

Greening the globe: Uncovering the impact of environmental policy, renewable energy, and innovation on ecological footprint

This study examines the effectiveness of environmental policy in reducing ecological footprint while considering the roles of renewable energy and innovation. We employ a cross-sectional autoregressive distributed lags to analyze panel data of 29 OECD countries from 1990 to 2020. Our results indicate that environmental policy significantly reduces ecological footprint among OECD countries, with its efficacy contingent upon bio-capacity surplus/deficit and the level of industrialization. We also find that renewable energy has a favourable impact on ecological footprint reduction, while innovation improves the environmental quality of OECD countries. However, population density and industrialization were found to decrease and increase ecological footprint, respectively. The study reveals bi-directional causation between ecological footprint and all variables except for economic growth. Our findings are robust under the conditions of short-run heterogeneity, long-run homogeneity, and cross-sectional dependence.

Achieving carbon neutrality target in the emerging economies: Role of renewable energy and green technology

Recently, various initiatives are being taken to attain environmental sustainability by reducing the carbon footprint of major emerging economies. The carbon-neutrality target has become a vital goal in this direction. This study examines the importance of green technology and renewable-energy in achieving the target of carbon-neutrality for 18 emerging countries from 1990 to 2018. We have used Cross-sectional auto-regressive distributed lag (CS-ARDL) estimator to investigate the short-run and long-run association among the variables. Further, Augmented Mean Group (AMG) and Common correlated effects mean group (CCEMG) estimators have been used to get robust results. The findings confirm that green technology, renewable energy consumption, urbanization, and corruption-control significantly mitigate carbon emission in both the short-run and the long-run. In contrast, Gross-Domestic Product (GDP), trade, non-renewable energy, energy-import, and energy-intensity are found to increase carbon emission. Further, it is found that renewable energy reduces carbon emission monotonically whereas green technology exhibits a U-shaped effect on carbon emission. Additionally, green technology effectively moderates the relationship between renewable-energy and carbon emission reduction in the long-run. The results of the Dumitrescu-Hurlin causality test indicate a bidirectional causality between green technology innovation and carbon emission while a unidirectional causality is found to exist from renewable energy to carbon emission. Based on these empirical findings, it is suggested that policymakers should strengthen eco-friendly policies, promote green technology and renewable energy, and invest in sustainable sources to achieve the carbon neutrality target.

Do natural resources impact economic growth: An investigation of P5 + 1 countries under sustainable management

Natural resources represent the base of our living and the entire economic activity. Their depletion is a major challenge for the economic development of both developed and developing economies. Their efficient use is an indispensable requirement and must be the aim of the public policies designed by the authorities worldwide. In this research, we have investigated the impact of the natural resources rent on the economic growth in some major wealthy economies of the world (P5 + 1 countries namely: US, UK, France, China, Russia, and Germany). We have applied a quantile-on-quantile regression to analyse this impact on different quantiles and a cross-sectional autoregressive distributed lag (CS-ARDL) approach for the panel of these six countries. The Dumitrescu-Hurlin panel causality test was also used to check the causality between natural resource rents and economic growth in these countries. Results show a negative relationship between natural resources rent and economic growth for the panel but a different impact on quantiles in each country. Only for China and the US, a positive effect can be noticed for both lower and higher quantiles of natural resources and economic growth. The Dumitrescu-Hurlin causality test shows that natural resources can predict economic growth only in China, the U.S., and the panel. In contrast, no causality was found for the other four countries included in the panel. We suggest that nations invest in wind and solar projects, use biofuels and nuclear energy, introduce a temporary profit tax to protect consumers from escalating energy prices, and increase energy efficiency in buildings and industry. Businesses would benefit from a regulatory framework that is uniform and exhaustive, as well as easier to traverse and more receptive to innovation and creativity. Public-private partnership investments in innovation, innovation incentives, and environmental sector opportunities may foster long-term economic growth.

Foreign direct investment and renewable energy: Examining the environmental Kuznets curve in resource-rich transition economies

This study evaluates the nexus mechanism between foreign direct investment (FDI), economic growth (EG), renewable energy (REC), natural resources (NR), economic freedom (EF), and carbon dioxide emissions (CO2) in transition economies from 1998 to 2019. This research employed cross-sectional autoregressive distributed lag (CS-ARDL) and panel quantile regression (PQR) to assess the heterogeneity of the distributions. The estimates show a U-shaped nonlinear relationship between environmental pollution and economic growth, suggesting that the Environmental Kuznets Curve (EKC) hypothesis does not hold for transition countries. Foreign direct investment was found to have a positive association with carbonization, signifying the presence of the pollution haven hypothesis in transition economies. Further, a negative relationship was established between economic growth and carbon emissions at lower growth rates, which transpires to be positive when the pace of growth crosses the threshold value. We also found that renewable energy and economic freedom have a significant role in promoting environmental sustainability, as these variables have adverse and significant effects on CO2 emissions. This finding suggests that increasing renewable energy consumption and intensifying the transition towards a market-based economy should be the main priorities in formulating sustainable development strategies. This research also provides the causal relationships between the selected variables and CO2 emissions and policy recommendations for green economic development.

How do strategic mineral resources affect clean energy transition? Cross-sectional autoregressive distributed lag (CS-ARDL) approach

In the transition to a low carbon economy, minerals are crucial. The demand for the minerals required to create and install green energy technology, such as solar panels, wind turbines, electric vehicles, and energy storage, is rising along with it. In particular, the countries that hold these mineral reserves should be thought of as thriving economically from the rising demand for essential mineral resources (such as cobalt, lithium, and others). This study uses import demand function analysis to look at how the major mineral importing countries’ mineral import demand changed in response to the clean energy transitions between 2000 and 2021 for selected 14 countries. In the study, the cross-sectional autoregressive distributed lag (CS-ARDL) method was used. Findings show that long-term renewable energy production has a largely favorable impact on mineral import demand. Additionally, CO2 emissions have a long-term negative impact on mineral import demands, but energy intensity and exchange rate are favorable for mineral imports. The findings have significant ramifications for using the mineral trade to speed up the transition to sustainable energy around the world. Therefore, the study’s key proposed policy is to emphasize the value of mineral resources in clean energy while maximizing their use in the transition to carbon-free energy.