Frequency Domain Causality Research Articles

The asymmetric and long-run effect of demand-based CO2 emissions productivity on production-based CO2 emissions in the UK

Trade effects on atmospheric air contamination of countries have received increasing global policy focus over the past few decades. The United Kingdom is committed to changing the complexities in international trade, current pathways to economic output pursuit, and carbon dioxide emission toward realizing the goals of the Paris Agreement and Kyoto Protocol. This research is motivated to explore the asymmetric long-run impact of demand-based CO2 emissions productivity on production-based CO2 emissions for the UK economy. Data for this assessment was drawn from 1990 to 2019 and analyzed using Gregory-Hansen cointegration, nonlinear autoregressive distributed lag (NARDL), and frequency domain causality techniques. Gregory-Hansen estimates for cointegration provide integration evidence for all variables. Estimates for NARDL long-run cointegration indicate (i) demand-based CO2 emissions productivity is a credible variable that contributes to reducing production-based CO2 emissions in the UK; (ii) both economic output and globalization contribute in rising production-based CO2 emissions in the UK; and (iii) the frequency domain causality test indicates one direction causality from demand-based CO2 emissions productivity, output, globalization, and consumption of green energy to production-based CO2 emissions in the UK.

Does climate policy uncertainty affect carbon emissions in China? A novel dynamic ARDL simulation perspective

This study provides new insights into the impact of climate policy uncertainty, energy consumption, and economic development on China’s carbon emissions. In doing so, we develop a novel index of China’s climate policy uncertainty (CCPU). We then use the newly constructed dynamic autoregressive distributed lag (ARDL) simulation model, the frequency-domain causality (FDC) test, and the fully modified OLS (FMOLS) estimation to investigate these potential relationships from 2005 to 2021. The empirical results suggest that increasing CCPU reduces carbon emissions in most parts of China, which improves environmental degradation. Furthermore, the effects of energy consumption and economic growth on carbon emissions are confirmed to be positive in each location. Finally, the results of the FDC and FMOLS confirm the robustness of the model. Our findings suggest that information from the CCPU can be used to forecast CO2 emissions in China. Furthermore, the government should strike a balance between economic growth and environmental regulation and promote the use of renewable energy to reduce carbon emissions. Proactively developing climate policy is important to achieve the goal of carbon neutrality.

Maliye Politikalarının İşsizlik Üzerine Etkisi: Türkiye İçin Ampirik Bir Kanıt

The economic policies implemented in a country can directly or indirectly affect many macroeconomic indicators. One of these macroeconomic indicators is the unemployment rate. The government's aim to reduce unemployment with the economic policies they implement. Especially in times of crisis, fiscal policies come to the fore, find a wider application area and support employment. The effects of fiscal policies may differ between expansionary and contractionary policies. The aim of this study is to investigate the effect of fiscal policies implemented in Türkiye on unemployment. For this purpose, monthly data for the period 2014:1-2022:12 were used in the study. In the study, public expenditures, direct and indirect tax revenues are used to represent fiscal policy. The ARDL bounds test was used in the analysis. In addition, the frequency domain causality test developed by Breitung and Candelon (2006) was used to the robustness check of the findings. The findings show that increases in government expenditures increase unemployment in the long run. On the other hand, while increases in indirect taxes reduce unemployment, increases in direct taxes have no effect on unemployment. The findings obtained from the causality test also support this situation.

The dynamic relationships between nuclear energy consumption, nuclear reactors and load capacity factor: time and frequency domain panel data analysis.

Nuclear energy is an environmental issue that needs to be carefully considered regarding its consequences. The environmental effects of nuclear energy encompass a complex interplay of factors, ranging from managing radioactive waste to the potential for accidents, emissions, and resource depletion, necessitating a thorough examination of its impact on our planet. This study examines the relationships between nuclear energy, nuclear fission, nuclear fusion, and load capacity factor for the eight countries (Canada, China, France, Germany, Japan, Russia, Spain, USA) that consumed the most nuclear energy from 1993 to 2018 using the time (Emirmahmutoglu & Kose, 2011) and frequency domain (Croux & Reusens, 2013) panel causality tests. The results differ according to time and frequency domain causality tests. While the time-domain causality test results showed no causal relationship between the nuclear energy consumption, nuclear reactors, and the load capacity factor variables, the frequency-domain causality test revealed that there are causal relationships between these variables in the short, intermediate and long run. According to the frequency-domain causality test results, there is a bidirectional causality relationship between nuclear reactors, energy consumption and load capacity factor. In line with the main findings of this study, it is recommended that these countries implement effective policies to increase environmental quality and make investments and incentives in nuclear energy and technologies.

Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria

To ensure sustainable development, it is crucial that the consumption of ecological resources remains within their productive capacity. This study aims to support policy formulation by examining the nexus between income, financial development, trade openness, and the ecological load capacity factor in Nigeria from 1970 to 2021. The results of the Bayer-Hanck and autoregressive distributed lag (ARDL) bounds cointegration tests indicate a long-run equilibrium relationship among the variables. Parameter estimations were conducted using the dynamic ordinary least squares (DOLS) and ARDL model estimators. Both the long-run and short-run results indicate that the ecological load capacity factor has a U-shaped curve with income, thereby validating the load capacity curve hypothesis in Nigeria. The estimated threshold turning points of the curve fall within Nigeria's current range of per capita GDP, which indicates that further increases in income will enhance ecological sustainability. Additionally, the ecological load capacity factor exhibits a negative relationship with financial development and trade openness in the long run. The Breitung-Candelon spectral Granger causality tests reveal that, in the long run, unidirectional causality runs from income and trade openness to the ecological load capacity factor, and bidirectional causality exists in the case of financial development. Furthermore, the tests indicate that none of the causal paths are significant for wavelength periods below four years. Therefore, the study recommends implementing medium-to long-term policy strategies to strengthen the ecological resilience base of the economy.

Enerji Tüketiminin Ekonomik Büyüme Üzerindeki Etkileri: Frekans Alanda Nedensellik Analizi

One of the most important indicators of the production channels of developed and developing countries is undoubtedly the energy problem. In addition, the nexus between economic growth and energy use differs from country to country. The main purpose of this article is to examine the nexus between economic growth and energy consumption in Turkey in the period of 2016 and 2022. Daily electricity consumption is used as an indicator of energy consumption, and industrial production index data is used as an indicator of economic growth. Toda-Yamamoto (1995) and Breitung-Candelon (2006) frequency domain tests were used to determine for the causality. According to the outcomes of the Toda-Yamamoto causality test, a unidirectional causality relationship was found from economic growth to energy consumption in the long run. Breitung- Candelon frequency domain causality test results revealed a short (temporary) and long (permanent) relationship from economic growth to energy consumption. In Türkiye, increases in economic growth (expansion of the production channel), increase the energy need more and thus this situation increases import dependency.

A pathway to a sustainable future: Investigating the contribution of technological innovations, clean energy, and Women's empowerment in mitigating global environmental challenges

This study aims to provide insights into the pathway toward a sustainable future by investigating the factors contributing to environmental sustainability. In this pursuit, the current study empirically analyzes the role of economic growth, technological innovation, clean energy consumption, and women empowerment toward global environmental quality from 1991 to 2015. For empirical analysis, autoregressive distributive lag and fourier frequency domain causality models are employed to test the long-medium and short-run association between the selected variables. Fully modified ordinary least squares and canonical cointegration regression estimations are also applied for robustness. The empirics of this study reveal that economic growth deteriorates the environmental quality in the long and short run. However, technological innovation, clean energy consumption, and women's empowerment help improve environmental quality in the long and short run. In addition, the robust analysis also authenticates the long-run outcomes of the study. This study suggests policy recommendations aimed at a sustainable future by establishing strong regulatory policy instruments, enforcing environmental laws, promoting energy-efficient technologies in industries and households, implementing women's employment protection policies, and strong regulatory policy instruments to achieve emission reduction in the global perspective.

Frequency domain causality and quantile connectedness between investor sentiment and cryptocurrency returns

This study investigates the frequency-domain causality and quantile connectedness between online investors’ fear sentiment and cryptocurrency returns. We propose cross-quantile coherency and networks to examine the frequency-domain nonlinear interdependence. First, we find that investor fear sentiment and cryptocurrency returns exhibit bidirectional causality. Second, fear exhibits an asymmetric connectedness with cryptocurrency returns across quantiles and frequencies. Third, short-term cross-quantile connectedness is found to be more significant than long-term connectedness. These findings can help investors and policymakers make decisions regarding diversified hedging and controlling for potential risks.

Natural resources led innovation: Employing structural break approach to explore USA's natural resources sector

A plethora of studies exist on the nexus of natural resources and economic expansion; however, the findings are subjective, and therefore, limited studies are available in the US based on the linkage of natural resources and technology via considering structural breaks. The study covers the different gaps in the literature by providing an understanding of whether the NRR fosters innovation or impedes it in the USA. Hence, this study evaluates the linkage of natural resource rents, including mineral rents, oil rents, coal rents, forest rents, and natural gas rents, and technological innovation in the USA from 1980 to 2021. The study also incorporated the role of economic growth as a controlling variable. The study employed ADF and Bayer-Hanck test for unit roots and long-term cointegration. The least squares method is employed as the primary method and for robustness check analysis, the frequency domain causality approach is utilized. The results validate variables are found stationary at difference D (1) and long-term cointegration has been confirmed in the variables. The findings deliberate that natural resource rents have the existence of a resource curse on technological innovation except for mineral rents which are significant even with the inclusion and exclusion of oil and coal rents. The study further concluded that economic growth stimulates technological innovation in the USA. The outcomes of robustness check analysis via frequency domain causality approaches provide similar results and indicate bi-directional causality among variables. It is concluded that natural resources should be diversified and break its cluster of monopolistic rents to sustainable development and foster innovation in the US.

Powering environmental sustainability through renewable energy and natural resources: a Dynamic ARDL simulation approach.

The objective of this study is to examine the role of renewable energy consumption and natural resource rents along with control variables of globalization and economic growth on the environmental sustainability of Jordanian economy from 1985 to 2019. These variables have been selected based on theory and empirical literature. We apply a Dynamic Autoregressive Distributed Lag (D-ARDL) technique along with robustness checks of Fully modified OLS (FMOLS), Dynamic OLS (DOLS), and Canonical Cointegrating Regression (CCR) techniques in order to achieve the above goal. The result from the analysis confirms that the environmental Kuznets curve (EKC) is not valid for the Jordan in either long or short term. Our estimation results also confirm the highly significant and negative impact of renewable energy on CO2 emissions in both the long and short term. However, both natural resource rents and globalization are significant and positive in the long run, implying that these variables are detrimental to the environmental quality. The interaction analysis presents detrimental effect of globalization in terms of renewable energy while it shows beneficial effect of globalization in terms of natural resource for environmental quality. The frequency domain causality result shows causality at different frequencies across the variables. Based on the results, several policy directions are provided in order to achieve environmental sustainability in Jordan.

Impacts of Environmental Variables on Rice Production in Malaysia

Climate change has brought significant changes to the earth and agriculture is the main economic sector that has suffered. The current study aims to assess the impact of climatic factors—measured by precipitation, temperature, and CO2 emissions—on rice production using time series from 1961 to 2019 in Malaysia. This research follows the ARDL bounds test and dynamic ARDL simulations methods to estimate long- and short-term connections of the variables under consideration. Empirical evidence indicates that long-run cointegration exist between variables. The results suggest that the sensitivity of rice production to changes in harvested area and temperature is high, while it is low for other inputs. Due to high humidity, the effect of precipitation on rice production is not significant, while temperature can reduce rice yield in the long and short term. However, the impact of carbon emissions on rice production is insignificant. Among the other determinants of rice production, the impact of agricultural labor is negative, but more area cultivation increases rice production over the long and short term. Results also show that the magnitude of the impact of the 2% increase (decrease) in temperature on rice production is greater than the changes in rainfall and carbon emissions. The results for the frequency domain causality test show that a one-way causality exists between temperature and rice production and between carbon emissions and rice production in the short and long run. Hence, the findings of this study can help policy makers to formulate appropriate adaptation methods and mitigation policies to reduce the negative effects of climate change on Malaysian rice production.

Analysis of the Relationship between the Highest Price and the Trading Volume of the Energy Company Shares in Kazakhstan with Frequency Domain Causality Method

This study analyzes the causal relationship between the highest price formation and trading volume in Energy Company stocks traded on KASE. In addition, Granger causality analysis is strengthened with frequency domain causality analysis to determine the concentration points of the causality relationship. This aspect provides vital decision support, especially in investment decisions. Three different relationships are identified for the causality between the highest price formation and the transaction volume. There is a two-way causality relationship for KEGC and a one-way for KZTO. No causal relationship was found for KZAP. These results can be interpreted as an indication that the Kazakhstan stock market offers a rich portfolio for investors. The causality structure of the investment climate in Kazakhstan can be analyzed by similar studies on the composite index and other companies traded in KASE. The time interval of the study was determined as between 01.01.2021 and 31.01.2023 and the data used were retrieved from the investing.com website.

Role of natural gas and nuclear energy consumption in fostering environmental sustainability in India

This paper investigates the role of nuclear energy in promoting ecological sustainability in India, focusing on three ecological indicators: ecological footprint (EF), CO2 emissions (CO2), and load capacity factor (LF). In addition to nuclear energy, the study considers the influence of gas consumption and other drivers of ecological sustainability using data spanning from 1970 to 2018. The analysis also takes into account the impact of the 2008 global financial crisis on the model, employing the autoregressive distributed lag (ARDL) and frequency domain causality approaches to assess the relationships. Unlike previous studies, this research evaluates both the Environmental Kuznets Curve (EKC) and load capacity curve (LCC) hypotheses. The ARDL results support the validity of both the EKC and LCC hypotheses in the Indian context. Furthermore, the findings reveal that nuclear energy and human capital contribute positively to ecological quality, while gas consumption and economic growth have a negative impact on ecological sustainability. The study also highlights the increasing effect of the 2008 global financial crisis on ecological sustainability. Additionally, the causality analysis demonstrates that nuclear energy, human capital, gas consumption, and economic growth can serve as predictors of long-term ecological sustainability in India. Based on these findings, the research presents policy recommendations that can guide efforts towards achieving SDGs 7 and 13.

Resource curse or blessing? Evaluating the role of natural resource, social globalization, and environmental sustainability in China

Due to increased energy use, the current global trend toward sustainable development has brought significant attention to environmental challenges. Even though there is a wealth of literature on growth, the environment, and energy, only a few studies have examined how natural resources affect environmental quality. In light of this, this study utilized data from 1970 to 2021 to objectively explore the impacts of natural resources, social globalization, and economic expansion on China's CO2 emission. The study employed several time series techniques to explore this connection. The unit root tests confirm that variables are stationary with a mixed trend. The results from the ARDL bounds affirm evidence of co-integration among the series. The autoregressive distributed lag (ARDL) results show that economic growth, fossil fuel, and natural resources worsen the environment while renewable energy and social globalization improve the environment. In addition, the frequency domain causality result shows that natural resources, social globalization, energy, and economic growth can forecast China's CO2 emissions in the long term. These results have significant policy implications for developing long-run sustainable policies.

On the conflict of natural resources hypothesis in Pakistan

Being a resource-based nation, Pakistan has been riddled with economic inadequacy attributable to its reliance on the resource industry. The conformity of natural resources to a curse or blessing cannot be ascertained merely from the perceptive of the influences of resource endowments on economic and social development, as the focus of previous studies proposed. This inquiry intentions are to scrutinize the nature of natural resources, government debt, trade globalization, government stability, and renewable energy consumption, as well as their implications for human development in Pakistan from 1990 to 2021, applying the novel dynamic autoregressive distributed lag (D-ARDL) simulations method and the frequency-domain causality (FDC) test to scrutinize long-, medium-, and short-run relationships. The observed results proposed that natural resource undesirably impact human development, confirming the existence of a resource curse effect. Simultaneously, government debt and government stability worsen, whilst renewables and trade globalization stimulate human development in long and short term. In addition, the FDC validates long, medium and short run causation hypotheses. The findings indicate an appropriate practice for the optimal use of resource rents in conjunction with lower public debt and a stable government system would culminate in human development and inclusive growth.

Role of energy mix and eco-innovation in achieving environmental sustainability in the USA using the dynamic ARDL approach: Accounting the supply side of the ecosystem

The United Nations Framework Convention on Climate Change (UNFCCC) partners agreed with a landmark decision on environmental concerns at the COP26 in Glasgow, outlining future attempts and measures to ensure a secure environment. In this regard, several prior studies have looked at environmental issues using carbon dioxide emissions, or ecological footprint. However, considering these variables may cause the supply side of environmental quality to be overlooked. To make up for this shortcoming, this study examines the effect of energy mix (fossil fuels, nuclear, and renewables), economic growth, and eco-innovation on the load capacity factor, which emphasizes both the demand and supply side of the ecosystem since it takes biocapacity and ecological footprint into account. Hence, this study differs from previous research in that it takes a broader view of environmental sustainability. In this milieu, the current research employs a recently developed dynamic autoregressive distributed lag (DARDL) simulation model for the United States of America (USA), harnessing data from 1990 to 2018. The findings unveil that nuclear and renewable energy consumption and eco-innovation all positively impress the load capacity factor, meaning that these variables help the USA maintain its environmental sustainability. On the other side, fossil fuel usage and economic expansion curbs environmental sustainability. Furthermore, since the short-run income elasticity is larger than the long-run elasticity, the environmental Kuznets curve hypothesis is legitimate for the USA. These findings also validated by the frequency domain causality test. Based on the findings, specific policy proposals are given to assist the USA in improving its environmental quality and achieving the UN Sustainable Development Goals (SDGs) 7 (clean energy) and 13 (climate change mitigation).

Which liquidity indicator is more informative to market volatility? Spectrum analysis of China’s base metal futures market

By applying the frequency domain causality test and cross-spectral coherence analysis, this study investigates the informational effects of liquidity indicators on the volatility of China’s base metal futures market from January 2016 to June 2022. We find that trading volume is more informative in economically explaining the price variations of most base metal futures for all frequency horizons, while open interest is more informative to Granger-cause economic innovations in the market volatility of the lead and nickel futures markets both in the short and long run. The coherence levels between the underlying frequency components for open interest are found to be greater than those for trading volume, suggesting that price volatility in China’s base metal futures market would be more responsive to shocks in open interest.

The role of technological innovation in fostering environmental quality in South Africa: Fresh evidence from the novel dynamic ARDL simulations approach

This study revisits the role technological innovation plays in fostering environmental quality in South Africa over the period 1960-2020. Unlike the previous studies, the work employs the novel dynamic autoregressive distributed lag (ARDL) simulations framework to assess the positive and negative changes in technological innovation, scale effect, technique effect, for- eign direct investment, energy consumption, urbanization, industrial growth, and trade open- ness on CO2 emissions. Second, the paper uses the Squalli &Wilson (2011)'s innovative meas- ure of trade openness to overcome the limitations associated with the conventional trade in- tensity. Third, the study uses the frequency domain causality (FDC) approach developed by Breitung & Candelon (2006) to robustly capture permanent causality for long, short, and me- dium-term associations among the variables examined. Fourth, the paper employs the second- generation econometric procedures, which take into account the multiple structural breaks considerably overlooked by previous works. For South Africa, our empirical results reveal that: (i) technological innovation contributes to lower CO2 emissions in the short- and long run; (ii) while technique effect improves environmental quality, the scale effect largely con- tributes to escalate CO2 emissions, thus confirming that the environmental Kuznets curve (EKC) hypothesis holds; (iii) urbanization, industrial value-added, foreign direct investment and energy consumption increase CO2 emissions; (iv) trade openness contributes to worsen environmental degradation in the long run; (v) scale effect, technique effect, technological innovation, energy consumption, foreign direct investment, trade openness, urbanization, and industrial growth Granger-cause CO2 emissions in the short, medium and long run showing that these variables are fundamental to determine environmental quality. In light of our em- pirical evidence, this paper suggests that South Africa's government and policymakers could consider the role of technological innovation as a clean source of technology in achieving energy security and fostering environmental quality in the country.

Symmetric and asymmetric frequency-domain causality between tourism demand and exchange rates in Türkiye: a regional comparison

PurposeThis study investigates if the causal relationships between the exchange rates and selected inbound markets’ tourism demand are temporary or permanent, and compares market reactions in Türkiye.Design/methodology/approachTourism demand is examined with a regional approach, focusing on the geographical markets, namely Europe, Commonwealth of Independent States (CIS) members and Asian countries, as the top inbound tourism markets, in addition to the total number of inbound tourists to Türkiye. Granger, frequency-domain causality, asymmetric Toda–Yamamoto, and asymmetric frequency-domain causality tests were employed to investigate and compare markets on exchange rate–tourism demand relationship for 2008M01-2020M02.FindingsThe results indicate that exchange rates affect European tourism demand both in the short and long run. The meaning of this Frequency Domain Causality (FDC) analysis finding shows that the exchange rate has both permanent and temporary effects on European tourists. The relationships are statistically insignificant for CIS members and Asian countries. The exchange rates also permanently affect total inbound tourism demand, but the independent variable has no short-run (temporary) effects on total demand. Asymmetric causality tests confirmed a permanent causality relationship from the positive and negative components of exchange rates to the positive and negative components of European and total tourism demand.Originality/valueThe Granger causality test provides information on the presence of a causal relation, while the FDC test, an extended version of Granger causality, enlightens the short- (temporary) and long-run (permanent) relationships and allows for analyzing the duration of the impact. In addition, asymmetric causality relationships are also investigated in the study. Besides, this study is the first in the literature to examine the relationship between tourism demand and the exchange rate regionally (continentally) for Türkiye.

The impact of green technology innovation, environmental taxes, and renewable energy consumption on ecological footprint in Italy: Fresh evidence from novel dynamic ARDL simulations

Over the last few decades, environmental hazards have grown as a result of the increasing ecological pressure exerted by humanity, as calculated by its ecological footprint (EFP). Green technology innovation (GTI), renewable energy consumption (REN) and environmental taxes (ET) now represent the best approaches to attaining sustainable development without harming the environment. In this context, the main objective of this paper is to investigate the effect of GTI, ET, REN, TO and GDP on the EFP in Italy during the period 1994–2019. We employ a novel dynamic simulated ARDL (DYARDL) model to evaluate the short and long-run run connections among the above variables. Our study also utilizes the frequency domain causality (FDC) test to analyze the direction of causality. The results of the study clearly indicate the existence of a long-term cointegration among variables. Further, the results demonstrate that GTI, ET, and REN significantly enhance the quality of the environment by lowering the EFP. However, TO and GDP have a positive significant influence on EFP and degrades the environment. Finally, FDC test results also confirmed that GTI, ET, REN, TR, and GDP granger cause EFP. The results obtained suggest that government and policy makers should promote the investment in green innovation and renewable energy sectors to accomplish the ecological sustainability.