Hurlin Panel Causality Test Research Articles

Μοdeling Environmental Degradation: The Effects of Electricity Consumption, Economic Growth and Globalization

This study aims to explore the effects of electricity consumption, economic growth and globalization on CO2 emissions in the case of the top ten electricity consuming countries. The sample used is annual data covering the period 1990-2018. This paper adopts the cross-sections independence and controls the heterogeneity between cross-sections by using the second generation econometric of panel data. More precisely, the CIPS unit root test, Pedroni (1999) cointegration, Westerlund (2007) bootstrap cointegration, and FMOLS and DOLS techniques have been applied. Additionally, the Dumitrescu and Hurlin (2012) panel causality test is used to investigate the causal nexus among the examined variables. The findings of the study support that all variables are integrated in the long run. Electricity consumption and economic growth have a positive and significant effect on CO2 emissions in these countries. On the other hand, globalization has a negative and significant effect on CO2 emissions, implying the improvement of environmental quality. The results also support the Environmental Kuznets Curve (EKC), as well as bidirectional causalities between economic growth and CO2 emissions, between electricity consumption and CO2 emissions, and between economic growth and globalization. Furthermore, unidirectional causalities running from globalization to CO2 emissions, from economic growth to electricity consumption, and from electricity consumption to globalization are found. Policy implications are further discussed.

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.

Moderating role of green innovation and fiscal expenditure towards achieving the Sustainable Development Agenda 2030 at provincial-level in China: policy implication from green total factor productivity.

Amidst resource loss and environmental protection constraints, achieving green development necessitates enhancing green total factor productivity (GTFP) as a means of promoting rational and efficient resource allocation, thereby balancing economic growth and environmental preservation. Meanwhile, literature on the subject matter of GTFP from a sustainability viewpoint is minimal. As a result, this study employs the panel dataset from 30 provinces of China spanning the period 2005 to 2020 and utilizes the method of moments quantile regression (MMQR) developed by Machado and Santos Silva (2019) to analyze the heterogeneous role of green innovation, environmental regulations, and fiscal expenditure on GTFP. Moreover, the controlling variable for this study includes renewable energy and economic growth. Furthermore, this study investigates the heterogeneous combined impact of green innovation and fiscal expenditure (GTE*FSE) on GTFP. The findings of the MMQR reveal that green innovation has a positive impact on GTFP, while fiscal expenditure, environmental regulations, and renewable energy consumption have a negative impact. GTE*FSE has a positive and significant effect on GTFP, indicating that FSE can reinforce and increase the positive impact of GTE on GTFP in the long run. The study also reveals that economic growth has a mixed effect on GTFP, depending on the quantiles. Furthermore, environmental regulation has a significant and negative impact on GTFP, contradicting the Porter hypothesis. Likewise, the robustness of the findings is confirmed by the results of the fully modified OLS (FMOLS) and dynamic OLS (DOLS) estimations, which indicate a similar impact of the determinants on GTFP as observed in the MMQR analysis. This reinforces the validity of the findings and suggests that the observed relationships are robust to different estimation techniques. Furthermore, the findings of the Dumitrescu and Hurlin (D-H) panel causality test reveal significant bidirectional causality between renewable energy consumption and GTFP and fiscal expenditure and GTFP. Policy-makers need to channel a large chuck of their fiscal spending into green innovation so as to boost sustainability.

Nexus between renewable energy consumption, foreign capital flows, and financial development: New evidence using CUP-FM and CUP-BC advanced methods

The study tries to explore the impact of foreign capital flows and financial development on renewable energy consumption. The empirical analysis is conducted using data for 17 developing countries for the period 1990 to 2020. The analysis is conducted for three sets of countries i.e. high-income developing countries, low-income developing countries, and all developing countries. The study uses sophisticated panel data estimation approaches to find the results, i.e. continuously-updated and fully modified (CUP-FM) and continuously updated and bias-corrected (CUP-BC) panel estimation techniques. The results show that financial development and capital flows positively affect renewable energy in all three samples of developing countries. The study also employs the Dumitrescu and Hurlin (2012) panel causality test to analyze the causal relationship among variables. Bidirectional causality is found between FD and RE and between CF and RE in all income developing countries group and high-income developing group but a unidirectional causality is found from FD and CF to RE in low-income developing countries group. On the basis of the findings of the study, it is recommended that to promote RE in developing countries it is imperative to encourage FD and CF in these countries. Further, developing countries ought to support the concept of green financing and need to allocate funds for investments in green energy to promote sustainable energy resources.

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.

Unveiling the spillover effects of democracy and renewable energy consumption on the environmental quality of BRICS countries: A new insight from different quantile regression approaches

This research explores the nexus of economic expansion, population, use of renewable energy, democracy, and the combined effect of democracy and GDP on carbon dioxide (CO2) emissions in the BRICS countries. We apply an extended STIRPAT model, including the variables of democracy and democracy with GDP, to examine the case of the BRICS countries between 1990 and 2019. Quantile regression methods (Simultaneous, Powell, and MM-QR) are applied together with the Dynamic OLS (DOLS), Fully modified OLS (FMOLS), and CCR. The results indicate that economic size (GDP) and population are linked to increasing levels of CO2. Whereas increased use of renewable sources of energy can help reduce environmental degradation. Similarly, an interaction between good democracy and economic growth is helpful for a sustainable environment. The Dumitrescu and Hurlin panel causality test highlights a bidirectional causal link between GDP, Democracy, and Population with CO2, but only a unidirectional causal relationship between renewable energy and CO2. Policymakers in the BRICS countries need to consider:1) pro-growth economic policies along with better democratic practices, 2) higher promotion of renewable energy resources, and 3) improving living standards for the population to achieve higher environmental quality.

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.

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.

The Relationship between Financial Development and Economic Growth in Five Fragile Countries

This study aimed to analyze the causality relationship between financial development and economic growth by using the data of the five fragile countries for the period 1980 to 2018. In this direction, the cross-section dependency is examined, and it is concluded that the cross-section is independent. Then, by performing the Delta homogeneity test, it is aimed to understand whether other countries are affected at the same level without a change occurring in any of the countries considered, and heterogeneity has been reached. Subsequently, the unit root test determines that the variables are stationary at different levels. Dumitrescu and Hurlin panel causality test is performed to test the causality relationship. As a result of the test, while it is seen that there is not a relationship between economic growth and financial development index, the examination with control variables confirmed that there is a causality relationship between economic growth and financial development. These results showed that the demand-leading hypothesis is valid in the five fragile countries. Finally, to understand the causality relationship more clearly in the study, the Hatemi-J asymmetric causality test was performed, and it is understood that the causality relationship between financial development and economic growth may differ according to country.

The dynamic impact of energy productivity and economic growth on environmental sustainability in South European countries

In the wake of global warming, the world is in an ecological state of disarray. Consequently, governments across the globe are committing to achieving low temperatures with a target of 1.5 °C, of which South European countries play a key role. This study aims to examine the effects of energy productivity (EP), economic growth (GDP), and globalization (GLO) on CO2 emissions of Cyprus, Spain, Portugal, Italy, Greece, and Malta (Southern European countries). The study covers the time from 1990 to 2018. Unlike earlier studies, the current analysis considers EP a significant factor in determining CO2 emissions in Southern European countries. Southern European countries primarily represent a group of emerging economies, but it is relatively ignored in empirical environment literature. This study is the first to reveal a newly second-generation connection among EP, GDP, GLO, and CO2 emissions in the Southern European countries by using the novel method of panel cointegration of Westerlund cointegration, Pedroni cointegration, augmented mean group (AMG), common correlated effects mean group (CCEMG), and followed by Dumitrescu–Hurlin causality tests. The empirical results suggest that the variables' effects are cointegrated, and EP reduces CO2 emissions while GDP, and GLO increase CO2 emissions in the South European countries. Furthermore, findings from the Dumitrescu Hurlin panel causality test suggest that any reductions in EP would have a positive impact on the extent of carbon emissions. On the basis of these empirical findings, this study suggests that policy administrators of the South European countries should consider the energy efficiency impact among the variables in setting their environmental, growth, and energy policies.

Nexus between Renewable Energy, Credit Gap Risk, Financial Development and R&D Expenditure: Panel ARDL Approach

In the study, we investigate the relationships between renewable energy consumption sub-indicators of G-8 countries and financial development, credit gap risk, and R&D expenditure from 1996 to 2018. The relationships among the variables in the study are analyzed by employing the Panel ARDL method and the Dumitrescu–Hurlin panel causality test. The cointegration relationships between the variables have been analyzed using the bounds test approach, and an unrestricted error correction model has been established. Contrary to previous studies in the renewable energy literature, this study employed the variable of credit gap risk. Therefore, we believe that this study will fill the gap in the literature and attract the attention of researchers and policymakers. The results indicate that increases in total demand for renewable energy positively affect the financial development of countries. Moreover, R&D expenditures increase as the demand for hydro energy and solar energy increases. This result indicates that wind power consumption has a short-term impact on R&D expenditure, and such an impact ceases to exist in the long run. According to the empirical research findings, the rise in demand for renewable energy may be a factor mitigating the credit gap risk of countries. In other words, the credit gap risk, which is considered a leading indicator of systemic banking crises, can be mitigated by the rise in the demand for renewable energy.

Does nuclear energy consumption contribute to human development? Modeling the effects of public debt and trade globalization in an OECD heterogeneous panel

Global energy systems must be restructured to accommodate low-carbon energy sources and technologies to improve the socio-economic welfare of the state and reduce energy impacts on the environment. While nuclear energy has long been controversial, especially among environmentalists, numerous advocates now argue that it should be considered a clean energy source to boost human welfare, achieve energy security, and combat climate change. This research intends to study the properties of nuclear energy, public debt, trade globalization, and their impacts on human development in a heterogeneous panel of sixteen OECD nations for the dataset from 1990 to 2019 using the novel cross-sectional augmented autoregressive distributed lag model and Dumitrescu and Hurlin panel causality test. The empirical results suggest that nuclear energy and trade globalization boost human development, while higher public debt lowers human development in the long and short run. The findings recommend that the development and expansion of nuclear energy consumption and trade liberalization are crucial for enhancing the social welfare of OECD nations, which must also lower their public debt levels to achieve inclusive and sustainable growth.

THE RELATIONSHIP OF INNOVATION AND COMPETITION: A CASE OF EMERGING MARKET ECONOMIES

Today, increasing competition with globalization has made it necessary for businesses to change according to this environment. Because the competition is intense both locally and regionally. Capital, raw materials, information and technology transfer are easily carried out in the world, which increases international competition, while local and international markets have become inseparable and become a whole. The developments all over the world, which started with the globalization process, created a competitive environment and made it compulsory for the world economies to adapt to the changing new order. It is of great importance for countries trying to survive in this competitive environment to focus on change and innovation strategies in order to achieve success. Innovation includes innovation activities that enable companies and countries to develop in all areas. The basic structure of innovation is based on differentiation and diversification. In this context, countries and organizations will be able to achieve economic progress, development and development through innovation activities. The aim of this study is to reveal the causality relations for innovation and competition for the emerging market economies for the years 2008-2019 with the Dumitrescu and Hurlin (2012) panel causality test. As a result of the analysis, one-directional causality between competition and innovation were determined.

Effect of Working Capital on Earnings Management Practices in Sub-Sahara Africa

The study examined the effect of Working Capital (WC) on Earnings Management Practices (EMP) among non-financial listed firms in Sub-Sahara Africa. Discretional Accruals (DA) and Real Earnings Management (REM) were proxies by Modified Jones model (1995)and Rowchowdhury (2006) models respectively. Secondary data sourced from annual reports of 276 listed firms for eleven years (2010 to 2020) were used in the study. The model of the study was estimated using Generalized Method of Moments estimator and Dumistrescu and Hurlin Panel Causality test technique. The findings revealed that WC among firms in Kenya, Tanzania South Africa and Zimbabwe (β=0.007; 0.002; 0.073; 0.115; P>|t|=0.000; 0.000; 0.000; 0.000˂0.05 respectively) have positive and significant effects on DA. However, WC among firms in Nigeria and Ghana showed no significant effect on DA. More so, WC among firms in Nigeria, Kenya, South Africa and Zimbabwe (β=0.002; 0.049; 0.050; 0.215; P>|t|=0.000; 0.000; 0.005; 0.000, ˂0.05 respectively) revealed positive and significant effect on REM. The study concluded that WC have positive and significant effect on DA and REM among firms in Kenya, South Africa and Zimbabwe. More so, WC have positive and significant effect on DA in Tanzania as well as on REM in Nigeria. The study therefore recommended that firms in sub-Sahara Africa should reduce their operating cycles to avoid EMP. Keywords: working capital, discretionary accruals, real earnings management, sub-Sahara Africa DOI: 10.7176/EJBM/14-18-08 Publication date: September 30 th 2022

Environmental regulations, political risk and consumption-based carbon emissions: Evidence from OECD economies

The staggering rise in global temperature and abrupt change of climate are the responses of nature alerting humanity to limit the emissions of hazardous gases and adopt environmentally-benign life style. The present study explores empirically whether any changes in environmental policy stringency (EPSI), political risk (PR), and the interaction term of EPSI*PR result in any alteration of consumption-based carbon emissions (CBCE) of the 24 advanced OECD economies over the period of 1990–2020. Prior to the empirical estimations, various diagnostic tests are employed. The empirical techniques include, panel cointegration check, Cross-sectional Augmented Autoregressive Distributed Lags (CS-ARDL), and Dumitrescu & Hurlin panel causality test. The findings confirm that imports, gross domestic product, and stringency of environment policies activate CBCE in short-run. Whereas, a unit improvement in political risk and its interaction with environmental policy stringency give rise to 0.231 MtCO2 of CBCE in long run. Interestingly, the squared term of environmental policy stringency effectively tackles such emissions. Based on the findings, we conclude that the present environment related policies of OECD member states does not effectively limit CBCE. In order to achieve genuine emissions reduction goals, the selected nations should restructure their environment related policies by prioritizing increments in environmental policy stringency along with minimizing the risks involved in the political system.

Impact of COVID-19 pandemic on exports: new evidence from selected European Union countries and Turkey

The COVID-19 pandemic, a new type of coronavirus that the world faced, broke out at the end of 2019 causing numerous impacts on all countries. Particularly the European Union (EU) countries were notably affected by COVID-19 pandemic lockdowns and stringency policies. Furthermore, although Turkey was successful in combating many areas of the COVID-19 pandemic compared to the EU countries, its international trade was affected. This paper empirically investigates the impact of the COVID-19 pandemic on selected EU countries (Bulgaria, Estonia, France, Germany, Greece, Latvia, Lithuania, Luxembourg, Poland, Romania, Slovakia, Slovenia, Spain, Czechia) and Turkey’s exports with monthly panel data analyses over the March 2020–December 2021 period. The findings suggest that the COVID-19 pandemic had negative impacts on exports in the EU and Turkey. For example, a 1% increase in COVID-19 stringency reduced exports by 0.102%, and a 1% increase in total COVID-19 cases caused a decline in exports of 1.620%. Furthermore, the Dumitrescu–Hurlin panel causality test results show a two-way causality relationship between COVID-19 cases and export levels. In addition, unidirectional causality linkage exists from the COVID-19 stringency index. Therefore, causality test results confirm an impact of the COVID-19 pandemic on exports during the stringency measures and lockdowns.

THE RELATIONSHIP OF INFLATION, UNEMPLOYMENT AND ECONOMIC GROWTH PANEL DATA ANALYSIS IN SELECTED OECD COUNTRIES

The aim of this study is to analyze the causality relationship between inflation, unemployment and economic growth variables for selected OECD (France, Australia, Canada, Germany, Iceland, Poland, Italy, Spain, Portugal, Turkey) countries using the data set for the years 2010-2020. with to reveal. In order to determine whether the economic growth variable has an effect on unemployment and inflation, unit root tests were first conducted for the variables used in the study. According to the results of the test, it was determined that the variables contained unit root. Considering the data obtained from this study, the hypothesis that there is no cointegration at the 5% significance level on average is rejected. According to Dumitrescu and Hurlin (2012) panel causality test, although a bidirectional causality relationship was detected between growth and unemployment variables, a unidirectional causality relationship was found between unemployment and inflation variables. In this context, it is known that there is a cointegration relationship between the variables (economic growth, inflation, unemployment) for at least one of the countries. It is expected that this study will contribute to the literature with current data and new generation econometric tests.

Life expectancy in the ANZUS-BENELUX countries: The role of renewable energy, environmental pollution, economic growth and good governance

Higher life expectancy reflects better public health status, an essential element for countries' overall development. However, life expectancy can be affected by various socio-economic and political factors. To mitigate the debate of the contributory factors, a detailed empirical study on factors that affect life expectancy is still a necessity. Therefore the main aim of this study is to identify the role of a number of disparate issues: renewable energy, environmental pollution, economic growth, urbanization and good governance on life expectancy at birth in the ANZUS-BENELUX countries utilizing the annual data of 24 years (1996–2019) by using different econometric approaches like the Driscoll and Kraay's (1998) standard error technique and feasible generalized least square (FGLS) model. This study reveals that renewable energy economic growth, good governance and urbanization have positive influences on life expectancy. With 1% increase of these variables, life expectancy increases by 0.009%, 0.070%, 0.022% and 0.107%, respectively; whereas environmental pollution has a negative influence on the life expectancy with the elasticity of 0.015. The Dumitrescu and Hurlin panel causality test also identifies a causal association between the selected variables and life expectancy. All the findings are theoretically and empirically consistent and have important breakthrough for health policies.

The causative factors of environmental degradation in South Asia

Urbanization, economic growth, and intensity of electricity consumption are the important causative factors of environmental degradation in South Asia. The present study has revealed this while investigating the relationship between the level of CO2 emissions and important economic variables in the context of five South Asian countries. Panel data are used for this study over the period 1974–2017. Panel co-integration tests and the Panel Autoregressive Distributive Lag (PARDL) model are applied for empirical analysis. Robust results of the analysis indicate that urbanization, Gross Domestic Product (GDP) and the intensity of electricity consumption are contributing factors to carbon emissions. Based on the results of the Dumitrescu Hurlin Panel Causality test, it is concluded that there is a bi-directional causal link between urbanization and CO2 emissions and unidirectional causal links from GDP to CO2 emissions, from GDP to urbanization, and from the intensity of electricity consumption to urbanization. This study focuses on planned urbanization, eco-efficient income growth, and sensible use of electricity to control CO2 emissions in this region. Considering the nature of these developing economies in South Asia, collaborative measures and strategic planning are suggested on a regional basis to address the concerns in the above-mentioned areas that minimize carbon emissions and thereby aid sustainable development in this region.