Dumitrescu-Hurlin Panel Causality Test Research Articles

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.

Proposal of fishing load capacity curve and testing validity: Evidence from top 20 countries with highest fisheries production by panel data approaches

This study investigates the validity of the Environmental Kuznets Curve (EKC) and the proposed Fishing Load Capacity Curve (FLCC) for the top 20 fishing countries. To this end, the study applies second-generation panel data approaches (panel LM cointegration test, common correlated effect mean group, and Dumitrescu-Hurlin panel causality test) for the period between 2000 and 2018. In this way, the study contributes by proposing the FLCC hypothesis, which implies that fishing load capacity (biocapacity of fishing areas divided by the footprint on those areas) first decreases with rising per capita income and then increases above a certain level of wealth. Such an approach can provide a good environmental assessment of fisheries sustainability because it considers both supply and demand aspects of water resources. The results demonstrate that both the EKC and FLCC hypotheses are valid, that fisheries production affects the quality of fishing areas, and that container port traffic has no effect on fishing load capacity.

Tourism development and material footprint: a disaggregate analysis of top ten tourist destination countries

ABSTRACT This empirical work analyzes the impact of tourism arrivals, tourist receipts, tourist expenditure, active population, and population density on environmental quality. Unlike previous studies, this study employed a consumption-based indicator of environmental quality, which is the material footprint. Given the significance of major tourist destination countries, a sample of the top ten tourist destinations has been selected for the analysis over the period 1995–2018. The study applies econometric tools that consider the issues of cross-sectional dependence and heterogeneity. The findings of cointegration show a significant long-run relationship between the variables. Similarly, pooled mean group results indicate a positive impact of tourist arrivals, tourist expenditure, and active population on the material footprint, while a negative impact is observed in the case of tourist receipts and population density. The robustness of long-run results has been examined with the help of Panel corrected standard errors. Moreover, the Dumitrescu-Hurlin panel causality test shows unidirectional causality from tourist arrivals and tourist receipt to the material footprint and unidirectional causality from the material footprint to tourist expenditure in the long run. According to our results, some policy implications have also been highlighted.

INCOME INEQUALITY, CLIENTELISM AND GOVERNANCE: IMPLICATIONS FOR SOCIOECONOMIC DEVELOPMENT IN WEST AFRICA.

Genuine redistribution of income is usually not commonplace in underdeveloped democracies. Instead, politicians in these democracies often target private, excludable and reversible benefits at the poor in exchange for electoral support. This electoral strategy often results in a situation where maintenance of political power or re-election becomes the focus of public policies instead of public welfare. This study investigated the main and interaction effects of income inequality and clientelism on government effectiveness in West African Countries from 1996 to 2020. The study objectives were achieved using pooled mean group (PMG) approach of the panel autoregressive distributed lag (ARDL) estimation technique and the Dumitrescu Hurlin panel causality test. Findings from the study revealed that clientelism enhances government effectiveness at higher levels of income inequality but inhibits government effectiveness at lower levels income inequality. The study findings also revealed positive relationship and uni-directional causality between income inequality and clientelism. The study concluded that government effectiveness which thrives on lower levels of income inequality and clientelism is beneficial to socioeconomic development; and that socioeconomic development and government effectiveness is interdependent and mutually reinforcing.

ANALYSIS OF THE CAUSAL RELATIONSHIP BETWEEN ECONOMIC GROWTH AND ENVIRONMENTAL DEGRADATION IN WEST AFRICA

As climate change continues to cause more concern the world over, analyzing the causal relationship between economic growth and carbon dioxide emissions is paramount in West African sub-region that has been the hardest hit by the menace. This study investigated the causal relationship between economic growth and carbon emissions in West African countries using panel data spanning over 1970 to 2019 and employing the Dumitrescu-Hurlin (2012) panel causality test. After establishing the order of integration of the study’s variables and cointegration, the results indicated that economic growth causes carbon emissions in the studied countries without feedback. But trade openness has a bi-directional causal relationship with carbon emission. Foreign direct investment (FDI) and financial development exhibit a unidirectional causal relationship with emissions and the causality runs from FDI and financial development to carbon emissions. However, in the case of population, the unidirectional causality runs from carbon emissions to population. The policy suggestion is that ECOWAS countries should promote conservation policies to curtail pollution while stressing the inflow of green FDI into the region.

Climate change and sustainable agricultural growth in the sahel region: Mitigating or resilient policy response?

The aim of this study is to provide an empirical answer to the question of whether nexus exists between climate change and sustainable agricultural growth in nine (9) countries within the Sahel region between 1990 and 2020. The study utilized Panel ARDL and Pairwise Dumitrescu Hurlin Panel Causality Tests to arrive at the following conclusions; firstly, the climate change orchestrated by change in rainfall is a very prominent factor causing reduction in sustainable agricultural growth in the Sahel region. One way feedback relationship flows from sustainable agricultural growth to greenhouse gas emission. In the light of the above, this study recommends that, in addressing the adverse effects of change in rainfall on agricultural sustainability, the policymakers in the Sahel region in particular and Africa as a whole should embark on a policy mix by embanking on mitigating policy response towards ensuring sustainable agricultural production via irrigation which is the best mode of water provisions without causing negative spilliovers on the environment. Also, the policymakers should be proactive by embarking on policies and programs that would build the resilience and adaptation of the region ahead of the future adverse effects of agriculturally induced climatic change.

Can geopolitical risk improve energy efficiency in European countries?

The European countries are highly dependent on energy imports, making them vulnerable to international geopolitical threats. In this context, improving energy efficiency emerges as a cost-effective solution. The primary purpose of this study is to investigate the impact of geopolitical risk (GPR) on energy efficiency for 18 European countries during 1991–2020 using the Dumitrescu Hurlin Panel Causality test, instrumental variable quantile regression (IVQR) model, and Data Envelopment Analysis (DEA). The study found that GPR has a positive impact on energy efficiency in higher quantities. This trend might be due to the fact that countries with high energy efficiency are better equipped to face GPR, thanks to their investments in infrastructure, particularly renewable energy technology.

Demystifying the relationship between ESG and SDG performance: Study of emerging economies

Companies and investors in emerging markets have started paying attention to ESG (Environmental, Social, and Governance) issues. There has been a growing demand for aligning ESG disclosure of companies to UN SDGs (United Nations Sustainable Development Goals), so understanding how the firm-level ESG affects the country-level SDG is very important for evaluating the advances in ESG and SDG implementation in emerging markets. This study examines the linkage between firm-level ESG disclosures and their relationship with country-level SDG scores over ten years for three emerging countries: India, China, and Brazil. The analysis of 1,500 top-listed firms in these countries reveals an increasing trend of firms going for ESG disclosures and increased ESG scores over the years in the three markets. Out of the total sample, almost 75% of firms make ESG disclosures in Brazil, followed by 54% in India and 32% in China. Additionally, companies in all these countries tend to emphasize governance-related disclosures more, with Brazil having higher ESG disclosures than India and China. The correlation and causality tests indicate a significant positive correlation between mean ESG scores and country-specific SDG scores. The Dumitrescu-Hurlin panel causality tests provide stronger linkages between firm-specific Environment scores and SDG scores, indicating that a firm’s environment disclosures translate into higher SDG scores. However, the same is not valid for Social and Governance factors. These findings have important implications given the global attention on the linkages between ESG disclosure and SDG score. AcknowledgmentsThe financial and infrastructure support provided by FORE School of Management, New Delhi in completing this paper is gratefully acknowledged.

The causal relationship among trade openness, financial development, and economic growth: Recent evidence from newly industrialized countries (NICs)

A country's financial development and trade openness are important indicators that affect integration into the economic system at the international level. Especially in newly industrializing countries, these variables can be beneficial in ensuring economic growth. Financial development supports economic development through the mobilization and effective use of capital. Trade openness is one of the unifying forces of productivity and economic growth. The effectiveness of trade openness is highly dependent on structural reforms. Newly industrialized countries are motivated to attract large amounts of capital and investment from the global economy. These countries tend to encourage exports while ensuring their industrialization. This research investigates the relationships between financial development, trade openness, and economic growth for ten newly industrializing countries. Research data contained the period from 1990 to 2020. The Dumitrescu-Hurlin panel causality test was used in the analysis. Considering the results, there is a uni-directional causality relationship between trade openness to economic growth and financial development to trade openness. Moreover, a bidirectional relationship between economic growth and financial development has been observed.

Analysing the Relationship Between Public Infrastructures and Economic Growth in Assam

This article evaluates the relationship between economic growth and public infrastructures in Assam using the panel dynamic ordinary least square estimation technique and the Dumitrescu–Hurlin panel causality test for the period of 1999–2000 to 2017–18. Empirical findings suggest that there is a long-term relationship between economic growth and public infrastructure indicators, except health infrastructure. One plausible reason for an insignificant relationship between health infrastructure and economic growth may be the insufficient availability of health infrastructure. However, all other public infrastructures have significant influence on achieving high and sustainable economic growth in Assam. In the short run, no public infrastructure has been found to have a significant impact on economic growth except for village electrification. Again, unidirectional causality from economic growth to public infrastructures (except road infrastructure) is acting as a hurdle in the path of the rapid expansion of public infrastructures in Assam. However, evidence of bi-directional causality between economic growth and road infrastructure suggests for extensive government intervention in road infrastructure development to achieve higher sustainable economic growth as well as balanced development across the state of Assam.

The Nexus between Liquidity and Credit Risks and Their Impact on Bank Stability

This study examines the nexus between liquidity and credit risks and their impact on bank stability in Nigeria. In order to achieve the research objectives, this study utilizes secondary data, which covers 12 Nigerian banks from 2010 to 2021. The Generalized Method of Moment (GMM) was estimated using the Arellano and Bond estimation technique. The results revealed that credit and liquidity risks negatively and significantly impacted bank stability individually and jointly in Nigeria. Furthermore, we deduced a positive correlation between credit and liquidity risks, with the correlation result statistically significant. Further investigation using the Pairwise Dumitrescu-Hurlin Panel Causality Tests indicated a one-way (uni-directional) causality from liquidity to credit risk. Further analysis showed that other internal bank-related indicators significantly impact bank performance. Bank Size, Equity, and Capital Adequacy positively and significantly impact bank performance. Likewise, macroeconomic indicators such as economic growth positively and significantly impact bank performance. In contrast, the inflation rate has a negative but insignificant impact on bank stability in Nigeria. Based on the findings, the study recommends joint management of credit and liquidity risks since a rise in liquidity risk will increase credit risk, resulting in bank instability. Thus, the results support bank regulation emphasizing the reduction of credit and liquidity risks in the banking sector since credit and liquidity risks have an attendant adverse effect on bank stability. The study will help bank managers balance liquidity, profit maximization, and risk minimization.

Exploring the N‐shaped EKC in the top tourist destinations. Empirical evidence from cross‐country analysis

AbstractTourism, energy consumption, economic growth, and financial development (FD) have serious consequences on environmental quality, which have gained attention of researchers. This research study attempts to highlight the impact of these variables on carbon dioxide (CO2) emissions in the Asian top‐four tourism countries, namely, Thailand, Singapore, Malaysia and Hong Kong. To achieve these objectives, the study applied Fully Modified Ordinary Least Squares (FMOLS) econometric technique to estimate the long‐run relationship, using annual data. Moreover, the study also applied the Dumitrescu–Hurlin panel causality test to identify the direction of the causality. The findings of the study show that energy consumption and trade openness have a negative impact on CO2 emissions. Moreover, tourism and FDI affect carbon emissions positively. Moreover, the study also validated the N‐shaped environmental Kuznets curve in these countries, indicating that economic growth positively influences carbon emissions in the early stages. However, in the middle stage, economic growth positively affects CO2 emissions, while in the later stage, it affects positively. Further, a unidirectional causality has been found from trade, economic growth and tourist arrivals to FD. Furthermore, based on empirical findings, the study suggests various policy implications for the government of the top‐four Asian tourist countries.

Mitigation pathways towards climate change: Modelling the impact of climatological factors on wheat production in top six regions of China

Northern and Southern regions are the two major wheat production belts of China. Agro–climatic resources have changed significantly in recent years, threatening staple food production in these regions. As a result, it is critical to investigate the long–term effect of climate change and agri–inputs on wheat production in China's top six wheat producing provinces (Hebei, Shandong, Henan, Jiangsu, Anhui, and Hubei) from 1995 to 2020. The estimated long-run results from the FGLS, DOLS, and D–K estimators revealed that climatic factors, specifically temperature, had a negative impact on wheat production, while precipitation had a positive impact. The findings also revealed that agrochemical inputs, such as fertilizer, increases wheat production, whereas pesticide use decreases wheat production significantly. The results from the Dumitrescu–Hurlin panel causality test showed a bidirectional causality between rainfall, fertilizer use, and cultivated area with wheat production, while a unidirectional causality association is running from labor force to wheat production. The current study provides several critical policy recommendations for China's sustainable food production through green agricultural practices and robust climate mitigation strategies.

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.