Dumitrescu-Hurlin Panel Causality Test Research Articles

Financial Development, ICT Use, Renewable Energy Consumption and Foreign Direct Investment Impacts on Environmental Degradation in OIC Countries

This article examines the influence of financial development, ICT use, FDI and renewable energy on environmental degradation in 38 OIC countries using panel data from 2003 to 2021. For data estimation, the authors employed the CD test, slope homogeneity test, CIPS and CADF test, FGLS model, PCSE model and Dumitrescu Hurlin panel causality test. It is found that the variables have cross-sectional dependence, slope heterogeneity, heteroskedasticity, and autocorrelation in a model. The Westerlund test of cointegration also ensures the cointegration among variables in a model while panel unit root tests found the mixed integration order of variables. The FGLS model shows that FD and renewable energy consumption negatively and significantly influence CO2 emissions in OIC countries. The outcomes also show that the use of ICT and FDI inflows in OIC countries are positively related to CO2 emissions. The PCSEs model is used as a robustness estimation technique which also confirms the estimates of the FGLS model. The authors suggested that financial development should be promoted to finance green energy projects, design regulatory policies to prevent polluted technology from the FDI inflows and to prevent the harmful effects of ICT on the environment, the use of green energy resources in ICT use should be promoted.

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

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

Exploring the Dynamic Relationships between Agricultural Production and Environmental Pollution: Evidence from a GMM-SYS Model in the Three Seas Initiative (3SI)

The Three Seas Initiative (3SI) is still an under-researched area and is particularly important due to historical circumstances and economic backwardness. A study was carried out to assess the impact of renewable energy and production made by the agricultural sector on CO2 emissions in 3SI countries between 2008 and 2020. The study used panel data analysis based on the two-step system’s generalized method of moments (GMM) and the Dumitrescu–Hurlin panel causality test. The results show that a 1% increase in the value added generated by agriculture increased CO2 emissions in the countries studied by 0.11%. In contrast, a 1% increase in GDP led to a 0.29% increase in CO2 emissions. Conversely, when renewable energy consumption increased by 1%, CO2 emissions fell by 0.25% in the countries studied. One way to reduce CO2 emissions from agricultural production in the short term is to increase the share of renewables, which incidentally is in line with EU action.

Determinant on Economic Growth in Developing Country: A Special Case Regarding Turkey and Bangladesh

AbstractThis study delves into the complex interplay between gross domestic product (GDP) and key macroeconomic indicators in the contexts of Turkey and Bangladesh. By examining panel data spanning from 1981 to 2020 sourced from the World Bank, we investigate the causal relationships between GDP growth and various factors including population growth, inflation, literacy rate, natural resource utilization, investment, and foreign direct investment (FDI). Our research aims to address critical questions regarding the economic trajectories of these two emerging economies. Specifically, we seek to understand how different macroeconomic variables influence GDP growth in Bangladesh and Turkey, while also exploring the unique socio-economic landscapes of these nations. Methodologically, we employ the Dumitrescu–Hurlin panel causality test to analyze the causal relationships between GDP growth and the aforementioned macroeconomic indicators. Our findings reveal direct, statistically significant associations between GDP growth and these variables, with population growth emerging as a particularly influential factor. The implications of our study extend beyond empirical observations, offering valuable insights for policymakers and stakeholders seeking to foster sustainable economic development in both Bangladesh and Turkey. By identifying the key drivers of GDP growth and their impact on economic performance, our research contributes to the existing body of literature on economic development in emerging economies. In conclusion, this study sheds light on the intricate dynamics of GDP growth in Turkey and Bangladesh, highlighting the importance of understanding and leveraging macroeconomic indicators to promote inclusive and sustainable economic growth in these nations.

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.

Combining the role of urbanization and renewable energy in sustainable development: testing the EKC hypothesis for Africa.

The pressing necessity to curb greenhouse gas emissions due to climate change has sparked significant scientific interest in comprehending the factors behind CO2 emissions, particularly concerning environmental sustainability challenges. Nonetheless, there exists a notable gap in our understanding of how the process of urbanization interacts with the utilization of renewable energy to impact CO2 emissions. This research endeavor seeks to evaluate the complex interplay among urbanization, renewable energy, and CO2 emissions across 46 African nations spanning from 1990 to 2019. To accomplish this objective, a variety of econometric methodologies are employed, including Driscoll-Kraay standard errors, IV-GMM, and method of moments quantile regression (MMQR) panel estimations to address issues like cross-sectional dependencies, endogeneity, heterogeneity, and panel Granger causality examination. The empirical results suggest that urbanization leads to an increase in CO2 emissions, whereas the consumption of renewable energy plays a role in enhancing environmental quality by reducing CO2 emissions. A significant outcome of the study is the revelation that a combination of urbanization and renewable energy leads to a decrease in carbon emissions. Moreover, the Environmental Kuznets Curve (EKC) hypothesis is validated. Lastly, through the Dumitrescu-Hurlin panel causality test, it is uncovered that urbanization and renewable energy consumption exhibit a bidirectional relationship with CO2 emissions. To reduce dependence on fossil fuels and curb CO2 emissions, policymakers should promote renewable energy usage in urban areas.

Can International Business Perspective Measure Sustainable Development of BRICS Countries? A Panel Data Analysis

The level of international business is highly dependent on the numerous macroeconomic and sustainable development factors that play their respective roles in defining a developing nation's economic progress. While examining the long-term growth of an economy, the consistency of the performance of the various elements in terms of their sustainability is a crucial matter to investigate. Moreover, it is known that the sustainable development of an economy is strongly associated with environmental impacts. Finally, the focus on new development patterns must be the highest concern for emerging economies. Considering this, the current study speculates on the relationship between foreign direct investment and the interaction effect of carbon emissions and poverty with control variables such as per capita income and education in BRICS economies. It concentrates on panel data ranging from 1993 to 2019 to explore the association among the said variables. It identifies the unique and definite macroeconomic parameters that are crucial for encouraging foreign direct investment in different countries. Applying the Panel Auto Regressive Distributed Lag Model, the study finds a positive interaction effect between carbon emissions and poverty that focuses on improving foreign direct investment in the long run. In the short run, an increase in per capita income always proves that BRICS will demonstrate less dependence on FDI net flows. The study also concentrates on the unit root measurement of the data by applying Panel Unit Root Test. Finally, to check the direction of causality, Pairwise Dumitrescu Hurlin Panel Causality Tests have been performed. The most recent update from these countries demonstrates that the strategy for achieving future sustainable economic growth is clear and swift. Hence, it emphasises the requirement of separate and exclusive policy-making to promote long-term sustainable economic growth in BRICS.

How does technological innovation affect the ecological footprint? Evidence from E-7 countries in the background of the SDGs

Although technological innovation plays a critical role in promoting sustainable development and environmental sustainability, there are few studies in the existing literature that address this relationship. This study aimed to investigate the relationship between technological innovation (TI), renewable energy consumption (REC), natural resource rent (NRR) and ecological footprint (EF) of E-7 countries (i.e. Brazil, China, India, Indonesia, Mexico, Russia and Turkiye) from 1992 to 2018 in order to ensure environmental sustainability in the context of the Sustainable Development Goals (SDGs). Analysis was performed using the ARDL estimator, robustness test and Dumitrescu-Hurlin panel causality (DHC) test. Long-term empirical estimates from the PMG-ARDL technique have shown that a 1 % increase in TI and REC reduces EF by 0.064 % and 0.234 %, respectively, i.e. increases environmental sustainability. At this point, it is possible to say that TI and REC contribute to the achievement of SDG-7 and 13 in E-7 countries while NRR and real income (GDP) were found to impede the achievement of SDG-7 and 13 in E-7 countries through an increase in EF. The results were confirmed using robustness techniques. In the DHC test results, while there is a unidirectional causality from TI to EF, from EF to NRR and trade openness, a bidirectional causality was found between GDP and EF. This study suggests that policymakers should focus on introducing environmentally friendly equipment to reduce environmental degradation, increase the share of RECs and focus on sustainable development within the framework of the SDGs.

How Do Financial Development and Industrial Structure Affect Green Total Factor Energy Efficiency: Evidence from China

Improving energy efficiency is vital for addressing climate change and reducing carbon emissions in emerging economies. Financial development (FD) is crucial for economic growth, and its environmental impact and the adjustment of the industrial structure (IND) is a crucial lever in China’s economic transition period. This study explored the relationship between FD, IND, and China’s green total factor productivity (GTFEE) from 2000 to 2020 using the super-efficiency SBM-undesirable model, which estimates China’s GTFEE. The ARDL results suggest that FD and IND enhance GTFEE in the long term, with FD promoting GTFEE by facilitating industrial structure adjustments. The Dumitrescu–Hurlin panel causality tests supported this finding. The QRPD panel quantile regression and heterogeneity analysis revealed significant heterogeneity in the effects. With increasing GTFEE, FD exerts a restraining effect, gradually weakening and transitioning into a promoting effect, while the IND consistently plays a promoting role.

Energy Consumption and Economic Growth Nexus in Africa Countries: A Simultaneous Equations Model Approach

By adopting the Cobb-Douglas production function, this study examined the relationship between energy consumption, GDP, capital stock, and labour in 22 African countries from 1990 to 2018. To achieve this goal, the simultaneous equations were analysed after utilizing the Generalized Method of Moments (GMM)/Dynamic panel data estimation approaches. To determine the most fitted model between the fixed and random model, the study employed the Hausman model and its approved the random model as the best fitted model. According to the empirical results, energy consumption has a strong positive influence on GDP. This suggests that as the economy expands, so will energy consumption. The coefficients of labour and capital are significant, though labour implies negative effects. Also, GDP has a firm positive influence on energy consumption. This suggests that as the economy expands, so will energy consumption. Capital has a positive coefficient. This means that the countries are capital-intensive. The Labour coefficient is negative and statistically significant, indicating that capital is more energy intensive than labour-intensive generates the majority of GDP. This also implies that capital replaced labour in those countries. Further, the Dumitrescu Hurlin Panel Causality Tests revealed a bidirectional relationship between GDP and energy consumption. Thus, there is a bidirectional relationship between energy consumption and GDP across the entire continent. Energy policy formulations are likely to be the best long-term economic growth strategy in African countries.

The Symmetric and Asymmetric Impacts of Energy Consumption and Economic Growth on Environmental Sustainability

Climate change has emerged as a global challenge because of its threat to sustainable development goals. Fossil fuels and economic growth are responsible for pollution and, thus, for climate change. In this context, this study explored the environmental Kuznets curve hypothesis for the case of 17 MENA countries over the period of 1990–2020. It investigated the symmetric and asymmetric impact of energy consumption and economic growth on CO2 emissions by controlling for population density, trade openness, and FDI inflows using panel linear and nonlinear ARDL models. The robustness of the results was checked using the fully modified OLS and dynamic OLS methods. Moreover, the Dumitrescu–Hurlin panel causality test was employed to determine the directions of causality between the variables. Overall, the empirical results of both panel linear and nonlinear ARDL models validate the environmental Kuznets curve hypothesis for the selected sample of MENA countries. Economic growth leads to environmental degradation only in the long run, whereas a rise in energy consumption leads to an increase in pollution in both the short and long run. These results are confirmed by the fully modified OLS and dynamic OLS methods. The findings of the Dumitrescu–Hurlin panel causality test also indicate the existence of bidirectional causality between energy consumption and CO2 emissions and between economic growth and CO2 emissions. Therefore, policy makers in the MENA region should invest in clean technologies and accelerate the transition to renewable energies such solar energy, wind power, and hydropower to align with sustainable development goals.

Asymmetric linkages among fintech, oil prices, governance, and growth in Southeast Asian economies

Fintech's disruptive potential in Southeast Asia can revolutionize financial inclusion and accelerate economic growth, warranting a comprehensive analysis of its interplay with oil prices, governance, and overall economic development. Against this backdrop, this study analyze the quantile-dependent (asymmetric) influence of oil prices, cumulative financial technology index, and institutional quality on economic growth for selected Southeast Asian countries from 1996 to 2021. Method of Moments Quantile Regression (MMQR) is used to analyse the asymmetric relationship, while the Dumitrescu-Hurlin Panel Causality test applies to the intrinsic casualty. The study's outcomes exposed the positive (negative) influence of Fintech and governance (oil prices); however, there marginal impact substantially varies at lower a higher growth quantiles. Labor headcount and capital stocks are among the main contributor of economic growth, specifically at higher growth quantiles (countries). Bi-directional causality has been confirmed through Dumitrescu-Hurlin Panel Causality test between Fintech, oil prices and governance with economic growth. Therefore, Generalized Method of Moment and Augmented Mean Group is further applied for robustness. After controlling reverse causality and endogeneity issues, the prior outcomes are validated. These findings offer valuable outcomes.

Are Human Development and Innovativeness Levels Good Predictors of the Competitiveness of Nations? A Panel Data Approach

Nations must adapt to the changing and developing world to sustain and develop their competitiveness. Human development and innovation are the two key concepts to increase the competitiveness of a nation. This study aims to examine the relationship between the Human Development Index (HDI), Global Innovation Index (GII), and Global Competitiveness Index (GCI) across different income groups from 2010 to 2019. The main objective is to identify potential variations in these relationships based on the income level of the countries involved. Panel data analyses using Common Correlated Effects Mean Group (CCEMG) and Augmented Mean Group (AMG) estimators are conducted to examine the relationships. Additionally, Pairwise Dumitrescu Hurlin Panel Causality Tests are conducted to examine the causal relationships between variables. The results show that HDI has a significant positive effect on GCI in each income group. Improving human development such as raising living standards and providing equal education opportunities for every member of society can contribute to a country’s competitiveness. Moreover, it is found that the effect of GII on GCI varies by income group. Specifically, the results indicate that the effect of GII on GCI is not supported for upper-middle-income countries. Therefore, while developing strategies to increase competitiveness through innovation, it is important to consider the income group of a nation. The findings of this study may assist policymakers, researchers, academics, and politicians to enhance their perspectives and formulate strategic and effective recommendations for action.

The non-linear relationship between globalization, financial development and energy consumption: Evidence from BRICS economies

In the era of globalization, financial development plays a key role in socioeconomic and environmental development. However, its adverse consequences on human life, environmental hazards, and high energy consumption cannot be ignored. Thus, this study investigates the non-linear relationship between globalization, financial development, and energy consumption for BRICS economies. In doing so, we have applied second-generation tests to identify cross-sectional dependence in the data. Cross-sectional augmented Dickey-Fuller (CADF) and Cross-sectional Im-Pesaran Shin (CIPS) have been performed to find the stationary level of variables. The long-term equilibrium link between the investigated variables has been established in continuance using the Westerlund Cointegration test. The Dynamic Seemingly Unrelated Regression (DSUR) indicates that U-shaped relationships exist for financial development and globalization with energy consumption. Conversely, there is an inverted U-shaped relationship exist between economic growth and energy consumption in BRICS. The Dumitrescu-Hurlin panel causality test findings show that a unidirectional link runs from energy consumption to financial development, economic growth to energy consumption, and globalization towards energy usage. Important policy implications have also been discussed.

Yükselen Sanayi Ekonomilerinde Dijitalleşme ve Küreselleşmenin Gelir Dağılımı Üzerindeki Etkisi

Digitalization is the most important indicator of technological development. More specifically, digitalization affects income distribution in different ways. Improvement in digital technologies promotes labour productivity and economic efficiency. Hence, how digitalization affects income inequality is required to obtain more evidence. This study investigates the distributional impact of digitalization in 29 Emerging Industrial Economies (EIEs) over the period 2000-2020. The panel ARDL model estimation results show digitalization alleviates income inequality. Likewise, economic growth, globalization, and institutional quality also negatively affect income inequality. In addition, economic growth, globalization, and institutional quality support the encouraging effect of digitalization on income inequality. Moreover, the Dumitrescu-Hurlin (DH) panel causality test result confirms the two-way causality between economic growth, globalization, and digitalization with income inequality, and the one-way causality running from income inequality to institutional quality.

A panel analysis of FDI inflows and poverty reduction in BRICS countries: An implication for the sustainable development goal one

FDI inflows and poverty reduction nexus has been an ongoing global debate in the recent times. Against this backdrop, this study examined the relationship between FDI inflows and poverty reduction in this economic bloc between 1990 and 2019. Data was collected from UNCTAD and WDI respectively, and a Panel Error Correction Model and the Pairwise Dumitrescu Hurlin Panel Causality tests were respectively employed. The following findings originated from the study; firstly, the relationship between FDI inflows and human development was negative and significant in the short run. In the long run, the reverse was the case. Therefore, the study concluded that FDI inflows have a trickle-down effect on poverty reduction in BRICS countries only in the long run. Therefore, it was recommended that for the policymakers in BRICS countries to achieve the Sustainable Development Goal (SDG 1), policy that will propel massive inflows of FDI into BRICS economies should be explored.

Healthcare Expenditure and Human Development Index as Determinants of Environmental Quality: A Panel Study on Selected Asian Countries

This study explores how healthcare expenditure and human development index impact environmental quality in 26 Asian countries during the period 2000–2018. Both aggregate and disaggregate (public and private) variables of healthcare expenditure are used. The dynamic ordinary least squares and augmented mean group estimation techniques are employed to assess the impact of selected variables on environmental quality captured using carbon dioxide (CO2) emissions as a proxy. The causality among the variables is tested using the Dumitrescu–Hurlin panel causality test. The outcome of the study showed that scaling aggregate healthcare expenditure, disaggregate healthcare expenditure (public and private) and human development index deteriorates environmental quality. The causality tests confirm a bidirectional association between aggregate healthcare expenditure and CO2 emissions, disaggregate healthcare expenditure and CO2 emission and a one-way connection from human development index to CO2 emission. The study finds that the significant positive impact of healthcare expenditure and human development index on CO2 emission is a concern, as rising emissions have adverse effects on the environment, public health and global economy. The study highlights the need for policies to promote sustainable development in a way that balances the needs of healthcare, human development and the environment.

Has the Regional Comprehensive Economic Partnership (RCEP) negotiations impacted on tourism flows of member countries?

PurposeUsing panel data for the Regional Comprehensive Economic Partnership (RCEP) member states, the present study explored the role of RCEP negotiations on tourism development.Design/methodology/approachA dynamic econometric model, namely the panel autoregressive dynamic lag model (PARDL) has been used. To test for panel causality, Dumitrescu–Hurlin panel causality tests were used.FindingsThrough the use of a dynamic econometric model, namely the PARDL, the results show that the RCEP negotiations, growth rates, as well as international trade contribute towards tourism development. Furthermore, the Dumitrescu–Hurlin panel causality tests confirm the existence of a bidirectional causal link between tourism development and RCEP negotiations. Finally, a unidirectional causal link is observed between tourism development and international trade.Originality/valueThis existing evidence on the topic seems to be very scant and limited to specific regions and particular regional trade agreements. This paper thus fills an important gap in the literature by advancing evidence about the effects of the RCEP on international tourism flows across member countries.

Democracy, green energy, trade, and environmental progress in South Asia: Advanced quantile regression perspective

Unquestionably, the industrial revolution of the twenty-first century contributes to global warming. Excessive amounts of carbon emissions into the atmosphere are responsible for global warming. Therefore, this research aims to assess the impact of GDP, green energy consumption, population, trade openness, and democracy on CO2 emissions in four selected South Asian countries from 1990 to 2019. This research also attempts to evaluate the EKC hypothesis in terms of economic growth (GDP2). The unit root of panel data and cointegration tests are executed in this study as a prelude to the regression analysis. Quantile regression for panel data, which (Powell, 2016) devised to deal with the fixed effect problem, is used in this study, and (Powell, 2016) empirical findings are the main focus. The estimated coefficient of GDP is positively significant, demonstrating that economic activity increases the burning of fossil fuels and upsurges atmospheric CO2 emissions. After attaining economic development, the reversed U-shaped EKC theory is valid for four selected South Asian countries. Economic development encourages these countries to use green technology, which helps mitigate CO2 emissions. The research, however, reveals that green energy is to blame for CO2 emissions. Burning biomass releases carbon dioxide that negatively impacts the quality of the environment. The study confirms that human activities are the leading contributor to environmental deterioration. Population growth has a worsening effect on the environment. The association between population and CO2 emissions is positively significant. The estimated coefficient of trade openness is positive, which increases CO2 emissions significantly. The estimated coefficient of democracy is quite negative. Therefore, this study suggests prioritizing democracy to reduce CO2 emissions. Citizens who live in democracies are better informed, more organized, and able to protest, all of which contribute to increased government responsiveness to environmental preservation. The results of the Wald test support the differential effects at various quantiles. The Dumitrescu-Hurlin (2012) panel causality tests are also used in this analysis to check causality between variables. Based on the findings, this research makes many policy suggestions for lowering carbon emissions.

Powering sustainable growth in West Africa: exploring the role of environmental tax, economic development, and financial development in shaping renewable energy consumption patterns.

Over time, the economy's growth, financial development, and environmental taxes have become vital tools in countering ecological degradation and promoting clean energy. However, there needs to be a research gap in assessing these policies' collective impact on renewable energy adoption, especially in developing West African countries. This study addresses this gap by evaluating the effectiveness of these policies from 1990 to 2020, using the Generalized Method of Moments (GMM), fixed effect, and pooled Ordinary Least Squares (OLS) models. The Dumitrescu-Hurlin panel causality test reveals bidirectional causality between economic growth and renewable energy consumption, as well as between financial development and renewable energy use. Unidirectional causality is found from environmental tax to renewable energy consumption. GMM results highlight the positive influences of economic growth and environmental taxes on renewable energy consumption, while financial development negatively affects it. These outcomes are consistent with fixed effect and pooled OLS models. Sectorial heterogeneity analysis indicates better results for countries with strong institutions, advanced technology, and strict regulations. In conclusion, this study's insights can guide policies for sustainability in West Africa, leveraging economic growth, environmental taxes, and technology for effective renewable energy integration.