Dumitrescu-Hurlin Panel Causality Research Articles

DEVELOPMENT-ECONOMIC FREEDOMS INTERACTION: A COMPARATIVE ANALYSIS OF D8 AND G8 COUNTRY GROUPS

One viewpoint, which has been gaining traction recently, posits that augmenting economic freedom within liberal markets while minimizing public intervention spurs development. Conversely, another standpoint suggests that as development progresses, there emerges a heightened demand for greater economic freedom, resulting in the implementation of liberal policies. In this context the primary objective of this study is to scrutinize the presence of causality between economic freedom and development. Additionally, the study delves into whether this causal relationship, if extant, is consistent across countries at varying stages of development. Consequently, an examination is conducted on two distinct country groups, namely D8 and G8, employing the Dumitrescu-Hurlin panel causality test. This method dissects the directional link between economic freedom and development for these country clusters spanning the period 2000-2019. The analysis reveals that within D8 nations, a reciprocal causality exists between economic freedom and development. In contrast, among G8 countries, no causal link emerges from economic freedom to development, while a unilateral causal relationship emerges from development to economic freedom.

Is the Romer Hypothesis valid for Newly Industrialized Countries? Evidence from panel ARDL

Purpose ― This study investigates the effect of trade openness on inflation, referred to as the Romer hypothesis, for Newly Industrialized Countries (NICs) from 1990 to 2022.Methods ― It uses a panel ARDL method and the Dumitrescu-Hurlin (2012) causality test. Economic growth, credit, and money supply are included in the model as independent variables. Findings ― The findings reveal no statistically significant long-term and short-term relationships between trade openness and inflation. However, money supply has statistically significant positive effects on inflation in the long run, while economic growth and credit exhibit no statistically significant impact. In the short run, money supply and economic growth reduced inflation. According to the Dumitrescu-Hurlin (2012) panel causality test, a bidirectional relationship exists between inflation and economic growth, money supply, and credit, while a unidirectional relationship is observed between inflation and trade openness. Implications ― Reducing the external dependency of sectors that rely on imported inputs is necessary to mitigate the adverse effects of trade openness on inflation in NICs. It is crucial to ensure that monetary policy helps align money supply and credit expansions with real sector trends.Originality ― This research is pioneering in its focus on testing the Romer hypothesis for Newly Industrialized Countries (NICs).

Unraveling the Effects of Economic Growth and Unemployment on Tobacco Use: A Panel Data Approach.

The economic situation is recognized as a significant factor influencing tobacco consumption. Accordingly, this research aims to investigate the relationship between economic growth, unemployment, and tobacco use. This investigation employs data from 1985 to 2019 to elucidate the relationship between economic growth, unemployment, and tobacco consumption in a select group of OECD countries. Employing Pedroni and Johansen-Fisher Panel Co-Integration Tests, we assess the co-integrating relationships. Furthermore, FMOLS and DOLS techniques are applied, complemented by the Dumitrescu Hurlin Panel Causality Test. FMOLS and DOLS results suggest that a 1% increase in GDP leads to a 6.46% and 7.29% rise in tobacco consumption, respectively, while GDP squared results in a 0.39% and 0.43% decrease. However, both tests failed to establish a significant relationship between tobacco consumption and unemployment. Cointegration was confirmed by Johansen-Fisher and Pedroni tests. Dumitrescu-Hurlin causality tests revealed direction of granger causality from economic growth to tobacco consumption, but not with unemployment. Tobacco consumption declined across all countries studied. Economic growth shows a positive association, while GDP squared has a negative association, indicating an inverted U-shaped relationship. No significant relationship was found with unemployment in the employed tests. In addition to the measures implemented by countries to reduce tobacco consumption, economic factors also exert a significant relation with smoking behavior. The available results suggests that economic growth initially associated with increase in tobacco consumption but reduction in later stages indicating a long-term inverse relationship between economic growth and tobacco use.

Examining the Influence of Renewable Energy Consumption, Technological Innovation, and Export Diversification on Economic Growth: Empirical Insights from E-7 Nations

The present research focuses on the endogenous development theory and investigates the relationships between economic growth (dependent variable) and renewable energy consumption, technological innovation, and export diversification (independent variables) in seven emerging economies known as the E-7. Previous studies have examined these factors individually but have not explored their combined impact on the E-7 economies. Therefore, this study contributes to the existing literature on the effects of renewable energy consumption, technological advancement, and export diversification on economic development. This study analyses the dynamic connections among these variables in seven selected emerging countries: Brazil, China, Indonesia, India, Mexico, Russia, and Turkey. Panel data from 1990 to 2022 are utilised, and various methodologies, including panel cointegration, the pooled mean group–autoregressive distributed lag (PMG-ARDL) estimator, and robustness tests, such as the fully modified ordinary least square and dynamic ordinary least square tests, are employed. Empirical inferences are drawn using the Dumitrescu–Hurlin panel causality (DHC) test, and the long-run relationships among the variables are validated using the Westerlund residual cointegration tests. The results from the PMG-ARDL estimator show that renewable energy consumption, technological advancement, and export diversification have a significant and positive impact on economic expansion, confirming the validity of the endogenous growth model in the E-7 countries. The control variable of the financial sector has a positive but insignificant effect on economic growth, while trade openness has a negative and significant effect. The DHC test results indicate a neutral feedback effect of renewable energy consumption on economic growth. The findings also reveal a unidirectional causal relationship between technological innovation and economic growth. Overall, these findings provide valuable insights for economic policymakers in the E-7 countries. By removing barriers to renewable energy consumption, technological innovation, and export diversification, policymakers can promote sustainable economic development.

Analysis on the relationship between coastal tourism and marine pollution: an empirical analysis of China’s 11 coastal regions

IntroductionCoastal tourism has become an important pillar of economic growth in China's coastal regions, yet no quantitative research has analyzed the relationship between coastal tourism and marine pollution.MethodsThis study, within a multivariate framework, comprehensively examines the impact of coastal tourism on marine pollution by employing various econometric techniques and focusing on four different types of marine pollutant discharges: chemical oxygen demand (COD), petroleum (PET), ammonia nitrogen (NHN), and total phosphorus (TP).Results and discussionPanel cointegration tests confirm a long-term relationship between coastal tourism and these four types of marine pollutant discharges. In the long run, coastal tourism has a significantly negative impact on COD, NHN, and TP. The results of Pooled Mean Group (PMG), Fully Modified Ordinary Least Squares (FMOLS), and Dynamic Ordinary Least Squares (DOLS) estimators show that for every 1% increase in coastal tourism revenue (TOUR), COD decreases by 0.734%, 0.536%, and 0.952% respectively; NHN decreases by 0.746%, 0.340%, and 1.633%; and TP decreases by 5.169%, 0.899%, and 0.334% respectively. However, the impact of coastal tourism on PET is not significant. The Dumitrescu-Hurlin (D-H) panel causality test results indicate different causality patterns between coastal tourism and various marine pollutant discharges. Specifically, there is a bidirectional causality between coastal tourism and COD, NHN, and a unidirectional causality between coastal tourism and PET, TP. Moreover, heterogeneity analysis reveals that coastal tourism does not significantly reduce all marine pollutant discharges in low-and middle-income coastal regions. Furthermore, compared to the central and southern coastal regions, the coastal tourism of northern regions has not significantly reduced marine pollution. This study can provide policymakers with references for developing coastal tourism and reducing marine pollutant discharges.

Empowering energy access: Exploring financial inclusion's impact on energy poverty in the fragile five economies

Energy poverty is a major issue that deepens economic challenges, especially in the five fragile states of Turkey, Brazil, South Africa, India, and Indonesia. The objective of this study is to examine the impact of financial inclusion on energy poverty, as removing financial barriers to energy access and utilisation is critical for sustainable development. The study hypothesizes that financial inclusion plays a decisive role in alleviating energy poverty. The study analyses the second generation panel methods such as AMG, Driscool-Kraay, and FMOLS using annual data from 2000 to 2021 and examines the causal relationships between variables using Dumitrescu-Hurlin panel causality test. The findings reveal that financial inclusion, low carbon technology trade, energy efficiency, economic growth, and human capital play a central role in alleviating energy poverty in these economies. On the other hand, a unidirectional causal relationship was found between financial inclusion and low carbon technology trade, human capital, energy efficiency, and energy poverty. In contrast, a bidirectional causal relationship was observed between economic growth and energy poverty. These findings provide important insights for policymakers and stakeholders; understanding the complex dynamics between financial inclusion and energy poverty can help design targeted strategies to increase energy access and promote inclusive economic development in fragile economies.

Climate change and food security causality in ECOWAS region: Do countries interdependence matter?

Studies abound on the causal relationship between climate change and food security; however, the ECOWAS sub-region, despite its unique climatic, agricultural, and socioeconomic characteristics, remains insufficiently explored. Utilizing data from 14 ECOWAS countries spanning 1986 to 2022, this study departs from earlier studies by incorporating the Dumitrescu–Hurlin Panel Causality test, the Pooled Mean Group (PMG), Common Correlated Effect Mean Group (CCEMG), Augmented Mean Group (AMG) and the Cross-Sectional Augmented Autoregressive Distributed Lag (CS-ARDL) technique to analyze the complex relationship between climate change and food security in the ECOWAS sub-region. Unlike the prior empirical studies, the findings reveal a robust mutual influence of climate change and food security in the ECOWAS sub-region. Furthermore, the findings reported a positive impact of climate change on food security, aided by increased cropland area and population growth. At the same time, drought incidence and erratic rainfall between July and September annually remained a severe concern in the region. However, while the conversion of forests and natural habitats into cropland in the sub-region can lead to heightened carbon emissions and reduced ecosystem services, policy recommendations advocate the need for ECOWAS sub-regional policymakers to carefully balance the benefits of food security through sustainable practices and environmental considerations to ensure long-term food security benefits.

Unveiling the synergy: How natural resources, energy prices and financial development drive the energy transition in N‐11 countries

AbstractThe energy transition (ET) is one of the major components of achieving the Sustainable Development Goal (SDG) 7. Based on the growing recognition of the need for sustainable energy, this study aims to investigate the influence of natural resource rent, energy prices (EPs), financial development (FD), trade and economic growth on the ET from 1990 to 2021 in N‐11 countries. The study employed the Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares techniques for the panel data analysis. These test findings revealed that natural resources rent, EPs, trade and economic growth are positively and significantly associated with ET. It indicates that these factors' are essential in promoting the shift towards renewable and sustainable energy sources. Whereas FD has a negative relationship with the ET, which underscores the need for targeted interventions and policy measures to address the challenges faced by financial systems. Moreover, the Pairwise Dumitrescu Hurlin panel causality test results declared the bidirectional association between natural resources and FD, economic growth and EPs and trade with all other variables. The study's outcomes suggest policy implications to promote and accelerate the ET process towards a greener and more sustainable future.

Exploring Economic Growth and Clean Fuel Technology: a Dumitrescu-Hurlin Approach

Objective: This research aims at exploring the relationship between economic growth and sustainable technology in 19 countries of G20 members. Theoretical Framework: In the Porter Hypothesis explained that in a regulations of environment will encourage innovation and improve economic performance. According to Porter, well-designed environmental standard can stimulate innovation and bring economic benefits such as increased competitiveness and efficiency Method: The research takes the data sourced from the World Bank and uses Pairwise Dumitrescu-Hurlin Panel Causality as the analytic tool. Results and Discussion: The results of research indicate that there is a causal relationship from ABB to GDP, but not vice versa. This means that the changes in ABB variable can be used to predict the changes in GDP variable, but not vice versa. Research Implications: The application of clean technology will increase the production efficiency and then will increase the economic output. This research contributes to the development of global policies that drive the balanced and environmentally-friendly growth in the whole world. Originality/Value: This research marks a novelty by applying the Pairwise Dumitrescu-Hurlin Panel Causality analysis tool, which allows for a deeper understanding of the causal relationship between economic growth and technological development in G20 countries. While most previous research limit themselves to simple causality analysis, this research details the dynamics of interactions among these factors.

Catalyzing the carbon emission: the interplay of financial development and foreign investment in Asia-Pacific and Oceanian region

Purpose This study aims to explore the interplay between CO2 emissions, financial development (FD) and foreign direct investment (FDI) in Asia-Pacific and Oceania. It also aims to understand short- and long-term impacts, emphasizing the role of FDI, FD and FD’s moderating effect on the FDI–CO2 relationship. Design/methodology/approach Using a 21-year panel data set (2000–2020) from 44 countries, the study employs the pooled mean group-autoregressive distributed lag (PMG-ARDL) model supplemented by the Dumitrescu–Hurlin panel causality test. This method assesses the complex dynamics and offers a robust analysis of short- and long-term effects in the Asia-Pacific and Oceanian context. Findings Long-term results indicate that FDI coupled with FD and FD’s moderating effect on FDI significantly contributes to CO2 emissions. Short-term relationships are more complex and lack statistical significance. FD positively moderates the FDI–CO2 relationship in the long run. Practical implications For investors, policymakers and stakeholders in Asia-Pacific and Oceania, the study highlights the importance of considering environmental impacts in investment decisions. The insights into the role of FDI and FD help craft policies and strategies for environmental sustainability. Social implications Socially, this research emphasizes the necessity of a balanced approach to economic development, considering the potential long-term environmental consequences. Policymakers and stakeholders may use these findings to guide discussions and actions to achieve sustainable and socially responsible development in this dynamic region. Originality/value The findings contribute original insights into the essential relationships among FDI, FD and CO2 emissions in a diverse region like Asia-Pacific, enhancing the understanding of environmental implications in regions experiencing rapid economic growth.

Nuclear energy generation's impact on the CO2 emissions and ecological footprint among European Union countries

This study employs Fully Modified Ordinary Least Squares, Common Correlated Effects and Dumitrescu-Hurlin panel causality techniques to investigate the environmental impacts of nuclear energy generation in European Union countries from 1990 to 2022. The ongoing debate within the European Union and the empirical contradictions in the literature, coupled with the overall singular-dimensionality surrounding the impacts of nuclear energy on the environment, necessitate a broader and comprehensive examination of its effects across various environmental dimensions. These dimensions include the presence of CO2 emissions and the ecological footprint generated. The findings reveal that nuclear energy adoption by countries tends to affect CO2 emissions but this relationship goes from CO2 to nuclear energy consumption as per the causality test, while the ecological footprint variable does not exhibit a causal relationship with nuclear energy consumption. We estimated that a higher presence of air pollutants promotes the generation of nuclear energy as an alternative to fossil fuel energy sources. The study highlights that while nuclear energy generation produces no air pollution, it does impose significant land use requirements, potentially leading to ecosystem degradation. Factors such as uranium extraction, nuclear waste management, disposal, and accidents contribute to this impact. Further research is needed to understand the specific mechanisms and factors contributing to the observed environmental degradation associated with nuclear energy generation.

Contribution of hydro energy production, economic complexity and technological innovation in achieving an environmentally sustainable Asia

The impact of hydro energy production, economic complexity, urbanization, technological innovation and financial development on environmental sustainability between 1995 and 2017 is examined for a panel of thirteen Asian economies using two environmental proxies— their ecological footprint and CO2 emissions. The non-parametric Driscoll-Kraay standard error method and the Dumitrescu-Hurlin panel causality test are applied to the data. Our findings show that hydro energy production and technological innovation have a significant negative impact on the environment, thus promoting environmental sustainability. Economic complexity significantly lowers environmental sustainability while the non-linear effect of economic complexity favors environmental sustainability; this confirms the existence of an economic-complexity-based inverted-U-shaped environmental Kuznets curve hypothesis. Moreover, urbanization and financial development significantly decrease environmental sustainability. The results of our study confirm the feedback causality between hydro energy production and carbon dioxide emissions. We recommend expansionary policies regarding hydro energy production that are beneficial for substituting fossil fuel energy. This paves a path towards environmental sustainability in this era of global boiling.

The dynamics of financial development, environmental degradation, economic growth and population health in the Economic Community of West African States

Abstract By exploring the nexus between financial development and population health in the ECOWAS region we contribute to the debate on population health and also examine the direction of causality between population health and its determinants. We utilised a panel dataset of 11 ECOWAS nations from 1990-2019. The study used the augmented mean group (AMG) estimator to examine the long-run associations among the chosen variables. The empirical results indicate that financial development and economic growth are positive drivers of population health. The analysis also demonstrates that lower population health is associated with increased environmental degradation (CO2 emissions) in the ECOWAS region. However, regarding the country-specific analysis, the impact of the determinants of population health varied per country. The empirical estimates of the Dumitrescu Hurlin panel causality tests reveal a bidirectional causality between population health and its determinants. The empirical outcomes offer new insights for policymakers by means of financial development, environmental degradation, and income as economic tools to promote population health by guiding finance, growth, and environmental policies.

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.

Trade policy and environmental sustainability in Africa: An empirical analysis

AbstractThis study investigates whether trade policy instruments—tariffs—strengthen or worsen African environmental sustainability. To drive out the objectives of the study, fully modified ordinary least square (FMOLS), dynamic OLS (DOLS), augmented mean group (AMG), method of moment quantile regression (MMQR) and Dumitrescu–Hurlin panel causality approaches are used to analyse the effect of tariff in addition to other control variables on carbon and ecological footprints as measured of environmental sustainability from 2001 to 2020. The results from the MMQR reveal that tariffs have a significant positive effect on carbon footprints in the 0.15 quantile, while the effect becomes insignificant between 0.25 and 0.5 quantiles. However, at the upper quantiles level (0.75–0.95), the impact of the tariff on carbon footprint is negative and significant, with increasing coefficients. Furthermore, tariffs significantly positively affect lower and middle quantiles' ecological footprints (0.15–0.5). However, the effect turns negative at the upper quantiles (0.9 and 0.95), suggesting that tariff reduces ecological footprint at these levels. In addition, the long‐run estimates (FMOLS, DOLS and AMG) also support the upper quantile estimates of MMQR. A one‐way causality between tariffs, carbon and ecological footprint was found. These findings reveal that tariffs do not create market inefficiency in Africa. This study recommends that tariffs as a trade policy instrument could be used to strengthen Africa's environmental quality. The government can use the tariff revenue to subsidize cleaner production and consumption and move the economy from a traditional energy source to renewable energy.

Impacts of mineral resources, economic growth and energy consumption on environmental sustainability: Novel findings from global south region

This study investigates the dynamic effect of mineral markets, economic growth, urbanization, financial development, non-green and green energy consumption on environmental sustainability. In this context, CS-ARDL, QLARDL, and Dumitrescu Hurlin Panel Causality approaches are used to estimate the panel data collected from seven Global South countries from 1992 to 2019. Results suggested that the mineral market, green energy and green financial development positively impact environmental sustainability at various quantile levels. On the contrary, urbanization and energy consumption have a negative impact on LCC, but these effects are statically insignificant in the short run, while green energy improves environmental quality in the long run. At the same time, financial development and economic growth have significant negative impacts on LCP, in the long run, reporting how the financial development in the world is not concerned about environmental issues. Moreover, the circular economy plays a crucial role in maintaining environmental sustainability by balancing mineral markets, economic growth, financial development, urbanization and energy consumption. Based on the empirical findings, several policy implications are suggested to selected global south countries to improve environmental sustainability through green energy transition and financial development without halting economic growth.

ANALYZING THE RELATIONSHIP BETWEEN HEALTH EXPENDITURE, RENEWABLE ENERGY AND LIFE EXPECTANCY: EVIDENCE FROM ASIAN COUNTRIES

This study investigates the relationship between health expenditures, renewable energy and life expectancy in Asian countries within a model covering the period 2000-2020. GDP data are also included in the model. In the study, after applying cross-sectional dependence test and Cross-sectional Augmented Dickey-Fuller unit root tests, panel cointegration test is employed to show whether there is a long-run mutual relationship between health expenditures and other variables, and then Dumitrescu-Hurlin (2012) panel causality analysis method is used to test the causality between the relevant variables in Asian countries. According to the empirical findings, while causality is found between health expenditures and renewable energy in most of the Asian countries, there is also a high level of causality between life expectancy and health expenditures. Moreover, the cointegration test between health expenditures and other variables confirms that there is a long-run relationship between the variables. It is concluded that policy makers in Asian economies should develop policy frameworks that provide opportunities for renewable energy consumption and support investment in renewable energy projects to promote the use of clean technologies. Thus, an increase in renewable energy consumption can lead to economic prosperity by not only improving quality of life but also increasing productivity.

Dynamic effects of digital governance and government interventions on natural resources management: Fresh findings from Chinese provinces

This study investigates the dynamic effect of digital government on natural resource management in 30 Chinese provinces, considering the government intervention policies, GDP, foreign direct investment, trade openness, and energy prices. In this context, QLARDL, QR, and Dumitrescu Hurlin Panel Causality approach estimate the panel data collected from 2010 to 2020. Results suggested that the digital government positively impacts natural resources management at various quantile levels. On the contrary, government intervention has a limited effect, while Foreign direct investment boosts natural management, especially in the long run. At the same time, energy prices and openness trade significantly negatively impact natural resources management. Based on the empirical findings, several policy implications are suggested for the Chinese provinces.