Dumitrescu-Hurlin Causality Test Research Articles

Can board funds, bank credit, and economic development improve food production? Evidence from South Asia

PurposeThis study investigates the impact of board funds, banking credit, and economic development on food production in the context of South Asian economies (India, Pakistan, Bangladesh, Sri Lanka, and Nepal).Design/methodology/approachThis study used data from the World Development Indicators covering the years 1991–2019. To investigate the relationship between the variables of the study, we employed the panel unit root test, panel cointegration test, cross-sectional dependence test, fully modified least squares (FMOLS), and panel dynamic least squares (DOLS) estimators.FindingsThe empirical results indicate that board funding significantly increase food production; however, banking credit had a negative impact. Furthermore, the findings indicate that economic development, Arable land, fertilizer consumption, and agricultural employment play a leading role in enhancing food production. The results of the Dumitrescu-Hurlin causality test also show substantiated the significance of the causal relationship among all variables.Practical implicationsSouth Asian countries should prioritize board funding, bank credit, and economic development in their long-term strategies. Ensuring financial access for farmers through micro-credit and public bank initiatives can spur agricultural productivity and economic growth.Originality/valueThis study is the first to combine board funding, banking credit, and economic development to better comprehend their potential impact on food production. Instead of using traditional approaches, this study focuses on these financial and developmental aspects as critical determinants for increasing food production, using evidence from South Asia.

Impact of economic growth and financial development on renewable energy use in selected oil-exporting countries

The aim of this study is to explore the influence of economic growth and financial development on renewable energy consumption. For the purpose of analysis, this investigation uses annual data on renewable energy consumption, economic growth, financial development, consumer price index, domestic investment, and foreign direct investment for 13 major oil-exporting countries, including Algeria, Guinea, Gabon, Iran, Libya, Nigeria, Congo, Republic of Venezuela, Saudi Arabia, Mexico, Malaysia, Sudan, and Russia, during the period 1990-2020. The study employs the Pooled Mean Group (PMG) method and Dumitrescu-Hurlin panel causality test to conduct the empirical analysis. The Hausman test determines the PMG estimator as the most suitable among the Mean Group (MG), Dynamic Fixed Effect (DFE), and PMG estimators. This research shows that economic growth and financial development have a positive and significant long-term impact on renewable energy consumption. This suggests that as the economy grows and financial systems develop, there is a potential for an increase in the use of renewable energy. The Dumitrescu-Hurlin causality test and the panel dynamic ordinary least squares (DOLS) method support these findings. From a policy standpoint, promoting economic growth and financial development could lead to greater use of renewable energy and contribute to sustainable development in oil-exporting countries.

CO2 Emissions, Remittances, Energy Intensity and Economic Development: The Evidence from Central Asia

Remittances are a crucial part of economic expansion, especially in Central Asia. Nevertheless, it is not possible to ignore its environmental damage. This paper is a pioneer in investigating the association among CO2 emissions, remittances, energy consumption and economic development in Central Asian countries (Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan) spanning the period of 1995–2022. As a methodology, the FMOLS estimator is applied to check linear impact and long-run association as well. Panel threshold regression model and 2SLS method are applied to examine potential non-linear relations among the studied variables. Hausman–Taylor and Amacurdy estimators are employed to control the endogeneity issue among the variables of interest. The results suggest the existence of a long-run relationship among the studied variables. Precisely, applying the FMOLS method, remittances negatively impact CO2 emissions in the long run. The relationship between CO2 emissions and remittances is distorted when the endogeneity issue is considered with the Panel threshold regression model, 2SLS method, and Hausman–Taylor and Amacurdy estimators. This distortion validates the linear impact of remittances on CO2 emissions in CA. The Dumitrescu–Hurlin causality test shows that all independent variables have a causal effect on the dependent variable, validating the effect of the studied variables. Consequently, decision-makers should facilitate remittances towards more environmentally friendly and sustainable solutions to prevent the detrimental effects of remittance inflows on carbon emissions in Central Asia.

Financial development and environmental quality nexus: Testing the double materiality hypothesis

ABSTRACT A novel paradigmatic concept has recently been introduced in the financial development-environmental quality nexus, referred to as the double materiality concept. This concept proposes that not only is financial development significant for the environment, but the environment also has a significant impact on financial development. We examine this financial development-environmental quality nexus by proposing and empirically testing the double materiality hypothesis. The cross-sectional Autoregressive Distributed Lag estimations and the Dumitrescu-Hurlin causality test are applied in the top-ten CO2 emitting countries over the period 1990–2018. We empirically confirm the validity of the double materiality hypothesis in these countries. Specifically, the cross-sectional Autoregressive Distributed Lag estimation results show that financial development exhibits a positive impact on the level of CO2 whilst the level of CO2 emissions hinders financial development in the top-ten CO2 emitters. Similarly, the causality test results show that there is a bidirectional association between the financial development and the level of CO2 emissions. Thus, regulatory authorities should take proactive approaches by assessing the externalities of climate-related risks and the potential channels that may trigger systemic risks.

Investigating the relationship between macroeconomic indicators, renewables and pollution across diverse regions in the globalization era

This paper delves into an econometric analysis to uncover the differences between Nordic European Countries - NEC (Norway, Denmark, Finland, Sweden) and South-East European Countries - SEEC (Greece, Bulgaria, Romania, Hungary). The focus is on exploring the interplay among electricity generation from Renewable Energy Sources (RES), CO2 emissions, urban population and GDP per capita in these two European regions. The study employs cross-sectional dependence, first and second-generation panel unit root tests, Pedroni panel and Westerlund panel cointegration tests, ARDL, Dumitrescu-Hurlin causality test to establish the relation among variables. The findings reveal that in both regions, CO2 emissions are significantly influenced by GDP per capita, urbanization and RES generation. Furthermore, urbanization plays an important role. When examining causality in SEEC, three bidirectional relationships are observed: urbanization and CO2, urbanization and GDP, urbanization and generation from RES, and two unidirectional causalities: CO2 and GDP, generation from RES and CO2. In contrast, for the NEC, there are two bidirectional causalities: urbanization and CO2, urbanization and generation from RES, and two unidirectional causalities: GDP and CO2, generation from RES and CO2. These results highlight the nuanced and varied nature of environmental and economic dynamics across various European regions.

The Nexus Between Remittances, Natural Resources, Economic Growth, Healthcare and Environmental Sustainability In CIS Countries

Globally, the issues about sustainable development are on the increase, especially in emerging economies as CIS countries. Due to rising migration and remittances, natural resources are degraded, and economic expansion might pose serious challenges to the environment and healthcare. Thus, this research looks at how life expectancy is affected by economic growth, natural resources and carbon dioxide (CO2) emissions in 11 CIS countries (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Ukraine, and Uzbekistan) by con-trolling energy consumption from 1990 to 2019. The Dumitrescu-Hurlin causality test discloses a cointegration between life expectancy, remittances, natural resources, economic growth, and CO2 Emissions. The empirical analysis indicates that life expectancy is positively correlated with re-mittances and GDP while water withdrawal and CO2 emissions have negative impact on life ex-pectancy in the case of CIS countries. Our empirical findings may provide insightful policy implications towards strengthening the public healthcare system. Therefore, appropriate policy responses can be developed towards advanced public healthcare and environmentally sustainable sources of energy in order to achieve the sustainable development goals.

The Unseen Ripples: Examining the Links Between COVID-19-induced Disruptions and Trade Dynamics in Asia-Pacific Countries

The global COVID-19 epidemic and the strategies that were adopted to restrict its spread, such as lockdowns, had a significant impact on international trade. While the health crisis and the lockdown restrictions were linked, their repercussions on world trade patterns were distinct. This study examines trade data from 30 Asian-Pacific countries to examine how the COVID-19 pandemic affected their trading patterns. In addition, it looks at the effects of COVID-19-related policies on trade flows and explores the causality between changes in trade flows and policies induced by COVID-19. The cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model, Juodis, Karavias, and Sarafidis (JKS) causality test and Dumitrescu–Hurlin causality test were employed to examine trade patterns of the Asia-Pacific amidst the COVID-19 pandemic. The results of CS-ARDL model showed that COVID-19 cases, deaths and policy-related indices induced a noteworthy and negative influence on export and import flows of Asia and Pacific both in the short- and long run. However, with few exceptions, on average, the impact of COVID-19-related measures is far bigger than that of COVID-19 deaths as well as cases in the long run. Further, the study found that the COVID-19 cases, deaths and COVID-19 policy-related measures have a Granger-causal relationship with exports and imports. Therefore, fostering regional cooperation, strengthening trade agreements and prudent management of COVID-19-induced policies will be essential in a crisis like COVID-19 to streamline trade processes and to achieve the optimum level of exports and imports.

Foreign direct investment and environmental degradation: Can intellectual property rights help G20 countries achieve carbon neutrality?

The G20 comprises rich, industrialized, and powerful nations that advance the world economy through foreign direct investment (FDI). Nevertheless, these countries account for the largest share of global carbon dioxide emissions (CO2). Enforcing intellectual property rights (IPRs) has become a useful tool for stimulating clean technologies to mitigate climate change. This study examines how IPR enforcement moderated the inflow of FDI and carbon emissions in the G20 from 2001 to 2017. We applied the Driscoll-Kraay robust standard error technique, Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Dumitrescu-Hurlin causality tests. The results show that FDI increases emissions, thus confirming the pollution haven effect. Long-term estimates suggest that the moderating role of IPRs in FDI significantly reduces environmental degradation. Causality analysis shows that FDI causes CO2 emissions in the long run, and carbon emissions enforce IPR regulations. Furthermore, we observed bidirectional causality between IPRs, FDI relationships, and carbon emissions. Based on these results, policymakers should enhance IPR policies and encourage clean technology through FDI among G20 members. In addition, governments should promote the clean-up of industrial processes, green finance, and the consumption of eco-friendly technologies, such as renewable energy, to achieve carbon neutrality.

BRICS and the climate challenge: navigating the role of factor productivity and institutional quality in CO2 emissions.

The BRICS countries are important contributors to global efforts aimed at preventing a climate catastrophe. These countries account for half of the total emissions generated by the G20 nations. In this context, this paper examines the relationship between total factor productivity (TFP) and CO2 emissions (CE) in BRICS countries from 1996 to 2022, with institutional quality serving as a moderating factor. Moreover, a diverse range of methodologies was employed to address the problem of cross-sectional dependence; i.e., the CS-ARDL technique is used to analyze the relationship between variables in both the long and short-run. The AMG and CCEMG methods are employed for robustness analysis, while the Dumitrescu-Hurlin causality test is used to assess causality. Our empirical analysis demonstrates that TFP is positively associated with CE. Conversely, we find that institutional quality has a negative impact on CE. Furthermore, the study confirms that the interaction between TFP and institutional quality has a negative effect on CE. This implies that an improvement in institutional quality leads to a decrease in CE, as it strengthens the regulatory system governing CE and reduces pollution. Environmental policy must include economic flexibility and policy unpredictability in order to meet CO2 reduction targets. In addition, the study has identified bidirectional causal links between CE and variables such as TFP, institutional quality, and other control variables. According to our study, the BRICS countries should encourage digitalization and renewable energy production while preserving a reasonable standard of institutional quality since they have significant resource advantages in the renewable energy sector.

Could Globalisation and Renewable Energy Contribute to a Decarbonised Economy in the European Union?

This study investigates the impact of globalisation, renewable energy consumption, and economic growth on CO2 emissions in 26 European Union (EU) countries, in the period 1990–2020. Second-generation panel unit root tests are applied, the Westerlund cointegration test is used, and a panel of fully modified least squares (FMOLS) and dynamic ordinary least squares (DOLS) techniques are employed to estimate the long-term relationship between variables. The causality relationship among the considered variables is identified using the heterogeneous Dumitrescu–Hurlin causality test. It was found that globalisation and renewable energy consumption contributed to the carbon emissions’ mitigation, while economic growth induced their increase. The results are robust when control variables (i.e., financial development, foreign direct investment, and urbanisation) are added to the model. Foreign direct investment and urbanisation are contributors to carbon emissions’ increase, whereas financial development induces their decrease. The effect of the considered variables on carbon emissions is differentiated by economic development and level of institutional quality. Unidirectional causality relationships were identified from globalisation to carbon emissions and from carbon emissions to foreign direct investment and bidirectional relationships were found between economic growth, renewable energy consumption, financial development, and carbon emissions. The policy implications of the results are also discussed.

Impact of remittance on economic growth and environmental quality in the purview of energy use, regulatory quality, and financial development

AbstractThis study investigates the asymmetric effects of remittance on economic growth (EG) and environmental quality in the purview of energy use, regulatory quality (REQ), and financial development (FD) in the top 20 remittance‐earning countries. It employs panel data from 1996 to 2020 and utilizes the generalized least square (GLS) estimation and the Dumitrescu–Hurlin causality test. The GLS result shows that remittance inflow has an asymmetric effect on EG as well as environmental quality, validated by a long run asymmetric test. Remittance shocks are beneficial for both EG and maintaining environmental quality in the context of the Environmental Kuznets Curve framework. Energy use; FD, and REQ all positively affect EG, whereas FD, REQ, and gross domestic product (GDP) are favorable for the environment except for energy use. According to a supplemented analysis, remittance and regulatory quality's combined influence on EG and CO2 are favorable, but regulatory quality's impact on the former is detrimental for both models. The results of the GLS estimation are endorsed by the causality analysis, which affirms their reliability. Positive remittance shock and financial development have bidirectional causality with EG, and both shocks of remittance and financial expansion have a two‐way association with CO2 emissions. Only REQ is affected by CO2 emissions. The outcomes have important policy implications for enhancing remittance inflow, ensuring smooth energy availability, a prudential financial system, and improving REQ to influence EG and control CO2 emissions effectively.

Tourism, Economic Growth, and Environmental Pollution in APEC Economies, 1995–2020: An Econometric Analysis of the Kuznets Hypothesis

Tourism plays an important role in fostering economic growth within the Asia-Pacific Economic Cooperation (APEC) forum member countries. Nevertheless, the development of this sector has resulted in significant depletion of natural resources and pollution. This research aims to determine the relationship between tourism, economic growth, and environmental pollution in both developing and developed APEC economies from 1995 to 2020. By adopting the Environmental Kuznets Curve (EKC) framework, two dynamic panel data models are estimated employing Dynamic Ordinary Least Squares (DOLS), and causal relationships are established using the Dumitrescu–Hurlin test. The results indicate that tourism and economic growth have had a positive influence on the rise of environmental pollution in both groups of economies during the specified period. This research offers new insights by analyzing twelve developing and nine developed APEC economies over a span of 25 years, estimating two DOLS models, conducting Dumitrescu–Hurlin causality tests, and presenting evidence of EKC for both types of economies. Consequently, the implementation of policies that foster the preservation of natural areas, the utilization of renewable energies, and the promotion of sustainable tourism practices is recommended.

Exploring the dynamic effect of economic growth on carbon dioxide emissions in Africa: evidence from panel PMG estimator

The relationship between economic growth and environmental pollution continues to attract significant research interest for researchers, practitioners, and policymakers all over the globe. Theoretically, the environmental benefit of economic growth should be greater than its negative externality with higher level of development. However, from the African perspective, countries with higher economic performances often face several environmental challenges, which raises the doubt whether economic growth helps or constrains environmental quality improvement. Under the environmental Kuznets curve (EKC) hypothesis, this study re-examined the effect of economic growth on CO2 emissions conditional on the dynamics of urbanization, renewable energy, and good governance across 47 African countries using panel data from 1996 to 2019. We employ panel cointegration tests to establish whether there is a long-run equilibrium relationship among our variables. We also apply pooled mean group ARDL (PMG-ARDL) techniques and the Dumitrescu-Hurlin causality test to determine the long- and short-run effects of economic growth, urbanization, renewable energy consumption, and good governance on CO2 emissions. The results from the PMG estimator validate the EKC hypothesis since a 1% surge in GDP per capita increases emissions by 0.61% in the long run, while a 1% increase in its square decreases emissions by 0.03%. In the short-run, economic growth does not exercise any significant effect on emissions. Furthermore, results indicate a significantly negative and positive long-run effect of renewable energy and governance, respectively. Finally, our causality test shows bidirectional relationship between CO2 emissions and all the explanatory variables. Henceforth, we provided policy implications based on the study’s results.

The role of institutional quality in the relationship between financial development and economic growth: Emerging markets and middle-income economies

In this study, the relationship between economic growth and financial development was analyzed for emerging markets and middle-income economies. The effect of financial development on growth, whether there is institutional quality or not, has also been investigated. In addition, which financial development indicator is more effective for growth has been examined. Six institutional quality indicators and seven financial development indicators were used. According to the Dumitrescu–Hurlin causality test results, there is a causality relationship between all financial development indicators and growth. According to the estimation results, financial development indicators have a positive effect on growth in the presence of institutional quality. However, if institutionalization is not included in the model, the effect of financial development indicators on economic growth is statistically insignificant.

Catalysts of Economic Welfare in Africa: A Cross-Sectional Autoregressive Distributed Lag Approach

Abstract This study provides empirical perspectives on the catalysts of economic welfare in Africa, drawing inference from macroeconomic and non-macroeconomic factors. Leveraging a sample of a balanced panel dataset of 35 countries across Africa, this study provides novel applications of the cross-sectional autoregressive distributed lag methodology to economic welfare analysis in Africa. Issues of cross-sectional dependence and slope homogeneity were accounted for whilst establishing causal relationships between economic welfare proxied by the Human Development Index and macroeconomic and non-macroeconomic drivers of welfare. Based on cross-sectional autoregressive distributed lag estimation results, a 1% increase in economic growth was shown to account for a 0.233 percent and 0.253 percent increase in economic welfare in the long run and short run respectively. In addition, technology accounted for a 1.81 percent increase in economic welfare in the long run. The outcome of the Dumitrescu–Hurlin causality test demonstrated causality between trade openness, government effectiveness, economic growth, and economic welfare.

OECD Ülkelerinde Finansal Yenilik ve Çevre Kirliliği Arasındaki İlişki

Climate changes as a result of environmental degradation have negative effects in many areas. Many studies in the economics literature have examined the effects of these negativities from different perspectives. In this study, the relationship between financial innovation and CO2 emission, which is newly used in the literature, is examined for 14 OECD member countries. LLC and IPS unit root tests, Pedroni and Kao cointegration tests and FMOLS estimator were used in the analyses for the period between 2009 and 2019. According to the findings obtained from the analyses, it is seen that financial innovation, economic growth and urbanization have negative effects on CO2 emissions. In addition, in the results of Dumitrescu-Hurlin causality test applied in the study, it was determined that there is a bidirectional causality relationship between economic growth, urbanization and CO2 emissions, and a unidirectional causality relationship between financial innovation and CO2 emissions. In this direction, it is considered important that companies and governments should act together. It is considered that the creation of green loans by financial intermediaries for environmentally sensitive projects can encourage investors. In order to prevent environmental degradation from a holistic perspective, the government should take measures such as subsidies and tax reductions to encourage environmentally friendly projects.

The relationship of economic growth, income inequality and poverty: a study on developing countries

This study aims to examine the relationship between income inequality, poverty and economic growth in selected eight developing countries determined by the World Bank's Atlas method between 2000 and 2020. The problem of the study is the increasing and deepening income inequality and poverty in developing countries in recent years. In this context, panel data analysis was chosen to reveal the relationship between income inequality, poverty and economic growth in developing countries, and a wide data set such as gini coefficient, head number index, per capita national income, democracy index, human development index and misery index was used. Income inequality, poverty and economic growth were analyzed with three different models) and compared with each other. Considering the results of the analysis, the Durbin-Hausman cointegration test was conducted to reveal the existence of a long-term relationship between the variables, and the existence of a long-term cointegration relationship between the variables was determined. According to the results of Dumitrescu Hurlin causality test, a bidirectional causality relationship was found between the variables. According to panel regression analysis, it was determined that while per capita increases in national income increase income inequalities, increases in democracy and per capita income reduce poverty, and increases in democracy index increase per capita income. According to the results, various social, economic and political policies have been proposed to reduce income inequality and poverty and increase economic growth.

The determinants of carbon emissions in Belt and Road Initiative countries: analyzing the interactive role of information and communication technologies.

Belt and Road Initiative (BRI) countries have benefited greatly from the intelligent growth of the green economy made possible by the widespread adoption of internet and mobile phone technologies. In addition, renewable energy consumption endorses sustainable development. Therefore, the purpose of this research is to determine if the use of information and communication technology (ICT) and renewable energy consumption has an effect on sustainable development in BRI countries, while using the augmented mean group (AMG) model, AMG robustness test, and panel Dumitrescu-Hurlin causality test to get robust results. According to the results of the study, the information and communication technology, renewable consumption, human capital, and urbanization reduces the emission of carbon dioxide emission in BRI countries while economic growth enhances the CO2 emission. Therefore, it is recommended that BRI countries increase their inter-regional cooperation in order to boost investment in renewable energy, effectively use the spillover effect of technology and knowledge, and end the resource curse in environmental policy. Based on the results, the authors of this paper propose a number of important steps toward environmental sustainability.

Exposing the environmental impacts of air transportation on the ecological system: empirical evidence from APEC countries

In the trend of globalization, economic and social benefits of air transportation (AIR) are not indisputable. However, AIR's environmental impacts are still a controversial issue. While previous studies had shown that air transportation contributed to air pollution by emitting CO2, lack of studies consider the effects of air transportation on ecological system. Therefore, this study investigates the relationship between air transportation and ecological footprint as well as CO2 emissions in the case of APEC countries, which is leading in the growth rate of air transport activities. Applying regression with Driscoll-Kraay standard errors for a data set from 1992 to 2015, our research provides evidence that: (i) air transportation increases CO2 emissions but this impact is negligible; (ii) air transportation contributes significantly in reducing ecological footprint of APEC countries; and (iii) globalization reduces both CO2 emissions and ecological footprint. In addition, Dumitrescu-Hurlin causality test helps to confirm the bidirectional causality relationship between air transportation and ecological footprint. Meanwhile, unidirectional causality runs from air transportation to carbon emissions. Based on these conclusions, some policy suggestions are given for APEC countries.

Does good governance and trade openness contribute to poverty reduction in BRICS? An empirical analysis

AbstractInstitutions are critical economic pillars that influence not only growth but also the distributional outcomes that affect the speed of poverty reduction. High variability in the extent of policy and trade benefits creates large disparities and makes the role of institutions more pervasive. In this light, this study aims to investigate the impact of governance and trade openness on poverty reduction in BRICS countries from 1991 to 2019. For this purpose, the study uses the dynamic common correlated effect method with a recursive mean adjustment approach to analyse the relationship among the heterogeneous panel variables with cross‐sectional dependence. The system generalised method of moments (GMM) instrument variable approach confirms the consistency of the results. Further, the study applies the Dumitrescu–Hurlin causality test to determine the causal relationship between variables. The findings show that trade openness and economic growth effectively reduce poverty in BRICS. Trade benefits the poor by raising their income. However, the negative effects of governance on poverty reduction dilute these benefits through a weakened trickle‐down effect. In addition, income inequality creates a negative impact on poverty reduction, which widens the poverty gap in the BRICS countries even further. The consistency of the results is confirmed by the system GMM instrument variable approach. As a result, it is recommended to ensure better regulatory practices that improve the quality of governance and address any structural inequalities directly.