Long-term Elasticity Research Articles

Long-Term Elasticity of Environmental Demand: Environmental Protection Expenditures in Sweden, 1972–2020

This study uses reconstructions of historical Environmental Protection Expenditure Accounts (EPEA) in Sweden from 1970–2020 to present a time series approach that analyses the demand for environmental services. The paper’s aim is to analyse environmental adaptation as a historical, economic and environmental process and to explore structural shifts suggestive of an overall periodisation of environmental demand. The article contributes to a deeper understanding of demand-side factors in environmental adaptation as part of contemporary economic history. The investigation also provides evidence that the income elasticity of environmental demand was slightly higher than 1.0 and largely stable over time, and even though we were able to detect trend breaks, there is insufficient evidence for major structural breaks suggesting sharp shifts in societal environmental preferences. Policies requiring sharply rising environmental expenditures should consider this level of historical stability. This article was published open access under a CC BY licence: https://creativecommons.org/licences/by/4.0 .

An empirical investigation of the impact of energy consumption, globalization and natural resources on ecological footprint and economic growth, evidence from China, Japan, South Korea and China Taiwan

Natural resources are regarded as important indicators that make great contributions to reducing environmental pollution and promoting growth in today's era of globalization. Thus, a more rigorous assessment of the complexity of determining growth and ecological footprint is critical. This study examines the dynamic linkages between globalization, natural resources, renewable and non-renewable energy use, ecological footprint and growth in Taiwan, Japan, China, and South Korea from 1975 to 2020. In terms of the certainty of cross-sectional dependence of panel variable data, this study uses second-generation panel unit root, cointegration, long-term elasticity, and two-way causality estimation tests to obtain reliable and valid results. The findings explore the fact that environmental degradation is substantially mitigated by the using of renewable energy sources, while other underlying factors, such as non-renewable energy sources, natural resource rent (NRR), economic growth, and globalization, exacerbate environmental pollution. In addition, the use of renewable and non-renewable energy, NRRs and globalization drive economic progress. Globalization and ecological footprint have a bilateral causal association. The research analysis supports the feedback hypothesis based on a bidirectional causal relationship between renewable energy use and ecological footprint. Based on the empirical findings of the current study, various policy endorsements are proposed to scare and control environmental damage without hampering growth in specific East Asian economies.

Effect of Private Sector Credit on Economic Growth in Nepal

This study aims to examine the key economic indicators with private sector credit and economic growth in Nepal. Commercial banks and other financial institutions lend money to businesses and individuals for investment and consumption. This study aims to analyze key economic indicators in Nepal, including Real Gross Domestic Product (RGDP), Private Sector Credit (PSC), and Gross Capital Formation (GCF), spanning from 1975 to 2022. Employing a quantitative methodology, econometric techniques such as time series analysis, regression modeling, and hypothesis testing were utilized to examine the long-term relationships among these variables, with a particular focus on the impact of Private Sector Credit on Economic Growth (EG). The findings, derived from comprehensive econometric analyses including co-integration tests and vector error correction models, reveal significant insights into Nepal’s economic performance and financial system. Results indicate that Private Sector Credit plays a crucial role in stimulating economic growth, with approximately 40.07% of the previous year’s imbalance influenced by the long-term elasticity of independent variables. These findings offer valuable insights for policymakers, businesses, and investors, facilitating informed decision-making to promote sustainable economic development in Nepal. Further research is recommended to explore the correlation between the diversification of Private Sector Credit types and economic growth more comprehensively.

Sustainable Pathways: CO2 Emissions, FDI, Trade, and Energy in Post-Communist Economies

This study explores the intricate interplay among CO2 emissions, economic development, foreign direct investment (FDI) inflows, trade, and energy consumption in post-communist republics spanning from 1995 to 2017. Utilizing a panel cointegration test, we unveil a profound and enduring relationship among these variables. Long-term elasticities are meticulously examined through Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) regressions, both of which consistently reveal a positive association between GDP per capita, FDI inflows, trade, energy consumption, and CO2 emissions per capita over the long term. Moreover, employing a panel causality test, our analysis identifies a robust unidirectional causality, specifically from CO2 emissions to energy consumption, signifying a pivotal link in the chain of influence (p<0.01). These findings shed light on the nuanced dynamics of CO2 emissions and their intricate connections with economic growth, foreign investments, trade, and energy usage in the post-communist context.

Exploring the link between economic policy uncertainty, financial development, ecological innovation and environmental degradation; evidence from OECD countries.

Governments have been concerned with balancing economic growth and environmental sustainability. Nevertheless, it has been noted that sustainable development is interconnected with economic variables, the institutional framework, and the efficacy of ecological regulatory measures. This study experimentally examines the correlation of economic policy uncertainty (EPU), financial development (FD), ecological innovation (EI), corruption (IQ), foreign direct investment (FDI), trade openness (TR), natural resource rent (NRR), and CO2 emission. We utilized longitudinal data from the Organization for Economic Cooperation and Development (OECD) countries from 2003 to 2021 to address the existing research void. This study used sequential processes of the linear panel data model (SELPDM) and the SYS-GMM approaches in obtaining consistent and efficient results. The inverse U-shaped relationship between FD and environmental degradation (ED) is confirmed by the long-term elasticity estimates generated by the SELPDM method Elasticity estimates for the long-run show that rigorous ecological regulations, higher renewable energy utilization, higher FD and less corruption, an interaction between FD and rigorous ecological regulations all contribute to reduced ED. Its also being observed that both EPU, FDI and trade openness are positively affecting the ED. It confirms the idea of pollution refuge between the OECD countries. The causality test results show that corruption and FD had reciprocal links with ED, while FDI, trade openness and strict environmental policies were also found to have bidirectional linkage with ED. To achieve sustainable development and prevent environmental degradation in the long term, we propose implementing an institutional financial framework and FD in OECD nations. This may be accomplished by focusing on the effectiveness of environmental regulatory laws and creating a conducive institutional environment.

Resources extraction and access to clean energy a curse or blessing for the economy? Middle-income economies case study

The study evaluates the long-lasting and debatable issue of the resource-growth nexus, which unearths whether natural resources have a curse or blessing on economic growth. Hence, this research revisits the nexus of natural resources and economic growth in middle-income economies with more relevant and effective variables: energy efficiency and access to clean fuel technology from 1988 to 2021. The study leveraged various time series methods, including the ADF-GLS stationary analysis to govern the stationary sequence and the Bayer-Hanck cointegration test for long-term cointegration. The primary methods include FMOLS, DOLS, and CCR, which reveal long-term elasticities between dependent and independent variables. Both non-parametric quantile and parametric robust regression are used for robustness checks. The results reveal that time series were found static D (1) and long-term cointegration occurs between economic growth and its regressors: mineral rents, natural gas rents, energy efficiency, and access to clean fuel technology. The empirical findings exhibit that natural gas and mineral rents show an encouraging influence on the economy's growth in middle-income economies, confirming the blessings of these resources. Moreover, energy efficiency and access to clean fuel technology allow effective use of natural resource rents and endorse supportable economic growth. The robustness check scrutiny confirms the results via robust regression, while the robustness test of quantile regression displays asymmetries in the mineral rents and natural gas rents across quantiles. These results indicate several policy implications to policymakers regarding the use of energy efficiency and access to clean fuel technologies should be increased and encouraged to allow the effective use of natural resources for sustainable expansion of the economy.

A closer look at residential water demand elasticities in the short and long run

Hotter, drier summers and population growth are causing water management challenges for water authorities in New Zealand. Effective long-term planning requires understanding the dynamics of household responses to demand management and climate variables. This paper analyses a large dataset of household-level demand data over nine years. Dynamic panel time series models are used to estimate short and long-term elasticities, interactions between demand management and climate variables, and associations with property characteristics. The general belief is that water demand becomes more sensitive to price changes over the long term compared to the short term. Yet, previous studies that directly compared long and short-run elasticities had limitations, as they imposed a constraint on the long-run estimate, assuming it to be larger. The models presented in this paper are more flexible and can identify the opposite scenario should it be present. We find long-run price elasticity may not be larger for new high-value properties or high-value properties with small gardens. Low-value properties have smaller short-run and larger long-run price elasticity. High-value properties respond more to outdoor restrictions and associated conservation messages than low-value properties. We discuss the policy implications of these findings.

Unfolding impact of natural resources, economic growth, and energy nexus on the sustainable environment: Guidelines for green finance goals in 10 Asian countries

The evolution of sustainable development goals (SDGs) has attracted attention to sustainability-related issues. The purpose of this paper is to ascertain whether natural resources play a significant role in influencing the sustainability of the environment and greenhouse gas emissions and to evaluate the effects of economic growth, natural resource use, green financing and the use of renewable and non-renewable energy on carbon emissions in ten countries (China, India, Pakistan, Japan, Indonesia, Turkey, South Korea, Thailand, Iran, and Saudi Arabia), chosen for having high gross domestic products (GDP) in the Asian region. Using the panel data estimating technique CS-ARDL, this study covers the period from 1996 through 2022, during which all countries' long-term elasticities were calculated. The results show that renewable and nonrenewable energy helps these nations' economies flourish. Natural resources can impede economic development in certain nations while stimulating it in others. While using renewable energy lowers carbon emissions, using fossil fuels for energy and economic growth both increase carbon emissions. The use of natural resources was a factor in the production of carbon dioxide (CO2) in every country represented on the panel. It is possible to make policy recommendations, such as using green energy sources and green financing that decrease greenhouse gas emissions and improving the educational system, as well as manipulating the government system to increase economic development in examined regions.

Renewable energy generation, agricultural value added and globalization in relation to environmental degradation in the five most populous countries in Asia

This study aims to examine the impact of globalization, renewable energy generation, and agricultural value addition on the ecological footprint (EF) and carbon emissions (CO2) of selected five most populous countries in Asia during the period 1975–2020. The Westerlund cointegration test supports long-term cointegration relationships among the considered variables in selected countries. The long-term elasticity results of the mean group, augmented mean group, and common correlated effects mean group estimators clearly show that agricultural value added and globalization make significant contributions to the ecological footprint and carbon emissions of the five most populous countries in Asia. However, renewable energy generation significantly reduces the ecological footprint and carbon emissions. Moreover, the impact of gross domestic product (GDP) on ecological footprint and carbon emissions is significantly positive while the impact of GDP2 on ecological footprint and carbon emissions is significantly negative, thus validating the inverted U-shaped Environmental Kuznets Curve hypothesis for specific Asian densely populated countries. The results of the causality test indicated a two-way causality between renewable energy generation and ecological footprint, supporting the feedback hypothesis. There is also a two-way causal relationship between agricultural value added and ecological footprint. Overall, these empirical results show that renewable energy plays a prominent role in combating environmental pollution in selected densely populated Asian countries. Thus, these countries should achieve their sustainable development goals by cultivating existing renewable energy generation policies. Moreover, specific densely populated countries in Asia should encourage clean energy production and consumption in the agricultural sector, and increased investment in renewable energy can improve environmental quality and agricultural production.

A Study on How an Aging Population Affects the Effectiveness of Fiscal Policy Using an ARDL Model

Purpose - This paper examines the impact of an aging population on fiscal policy efficiency. Two significant issues arise from Korea’s aging population: old age poverty and the sustainability of government debts. As Korea’s demographic trajectory is similar to that of Japan, it is vital to study fiscal soundness and efficiency from various points of view.
 Design/Methodology/Approach - The Autoregressive Distributed Lags (ARDL) - EC model was adopted. ARDL shows statistically robust results when the data are a mixture of stationary at the level or the first difference. The data was downloaded from 1994 to 2019 of five OECD countries; Canada, Japan, Spain, Sweden, and Korea. The country selection followed the regime classification of OECD (2012) based on the labor market structure and redistribution effect after tax.
 Findings - First, the dependency ratio negatively affects the efficiency of fiscal policy. The marginal propensity was suppressed due to the consumption variance in old age cohorts as the dependency ratio increases. Economic agents react to save for future uncertainty when government spending is funded by issuing debt. Second, the long-term elasticities differed among countries, with Korea having the highest at 0.56, followed by Canada at 0.55, Spain at 0.39, and Japan at 0.36.
 Research Implications - Efficiency of fiscal policy is dependent upon the reactions of economic agents. The priority of the government should focus on managing the future expectations of economic agents by implementing structural reforms in the labor market and pension system.

SUPPLY OF CASSAVA IN MAGELANG DISTRICT CENTRAL JAVA PROVINCE

Cassava is a commodity that has the potential to be developed into a regional superior product. Cassava can be processed into other forms of food that are consumed by the community and one of the centers is in Magelang Regency. This study aims to analyze what factors influence the supply of cassava in Magelang Regency. The data used comes from secondary data. The data used from 2008 to 2022 comes from the Central Bureau of Statistics. The results of the study stated that the supply of cassava in Magelang Regency was jointly influenced by the previous year's cassava price, the previous year's sweet potato price, the previous year's cassava production, the harvested area of ​​the previous year's cassava, the previous year's corn price. Meanwhile, partially the supply of cassava in Magelang Regency was influenced by the price of sweet potatoes in the previous year and the cassava harvested area in the previous year. Based on the results of the analysis, the price elasticity of cassava in the previous year on cassava supply in Magelang Regency was inelastic for both short-term elasticity (0.701) and long-term elasticity (0.02).

Analysis of Factors Affecting the Dynamics of Residential Real Estate Prices in Russia

In this paper, we have constructed a VAR model to identify and assess the impact of real interest rate shocks, real estate demand, oil prices, uncertainty, and aggregate business activity on residential real estate prices in Russia. The relevance of the research is due to the following: the dynamics of real estate prices determines the consumer and investment behavior of households, and serious fluctuations in real estate prices lead to adverse consequences in many areas of life, so more and more researchers are asking questions about the presence of bubbles in the real estate market, which can be dangerous to the stability of the economy. In addition, a sharp increase in the cost of housing in Russia in 2020 is an open question for researchers. Our goal is to determine what factors caused the rise in real estate prices in Russia in the time interval from the Q1 of 2000 to the Q2 of 2022. A VAR model with a Cholesky decomposition was used for the evaluation. Several specifications were considered with the inclusion of the real oil price as an exogenous variable and a set of endogenous variables: real GDP, real interest rate, uncertainty index and housing price index. The main conclusion of the paper is that the housing market is sensitive to identified macroeconomic shocks, and a decrease in the interest rate leads to an increase in demand and real estate prices. The estimate of the long-term elasticity of housing prices for oil prices was 0.35, the dynamics of oil prices explained a significant proportion of the variation in real estate prices, but the predominant role in housing price fluctuations is given to housing demand shocks. The housing demand shocks in Russia itself had a negligible impact on GDP.

The key roles of renewable energy and economic growth in disaggregated environmental degradation: Evidence from highly developed, heterogeneous and cross-correlated countries

This paper investigates the validity of the environmental Kuznets curve (EKC) hypothesis for the G7 group of countries through the ecological footprint and its components (namely built-up land, carbon, cropland, fishing grounds, forest land, and grazing land). Most previous contributions rely on CO2 emissions as a measure of environmental damage, whereas using disaggregated ecological footprint allows us to consider resource consumption and waste generation compared to nature's resource generation and waste absorption. The empirical application is based on a panel data analysis for G7 countries from 1980 to 2018. The results indicate that the EKC hypothesis is confirmed for the ecological footprint overall, but the impact of GDP growth is unequal across its components. Long-term elasticities point to renewable energy generation significantly improving environmental sustainability. Globalization also decreases pollution indicators, while economic complexity seems to contribute to environmental degradation.

Covid-19 Affects The US Economy Uncertainty?

The economic and social costs of the COVID-19 pandemic affect society, individual investors, policy makers and all financial market participants. The COVID-19 pandemic has created shock waves in financial markets, as well as commodity prices, including oil, and the real economy. This study analyzes the short-term and long-term relations among the number of total COVID-19 cases, USA stock price index, crude oil price and economic policy uncertainty index for USA, based on daily figures between 31.12.2019 and 30.11.2020. The results of the study indicate that there are short-term and long-term cointegration between economic policy uncertainty index determinants in USA. Long-term elasticities project that a 1% increase in the number of COVID-19 cases would lead to an increase of 0.086% in USA economic policy uncertainty index, and an increase of 1% in crude oil price would lead to a decrease of 0.410% in USA economic policy uncertainty index and an increase of 1% in USA stock price index would lead to a 3.167% decrease in USA economic policy uncertainty index.

Exploring the role of nuclear energy in the energy transition: A comparative perspective of the effects of coal, oil, natural gas, renewable energy, and nuclear power on economic growth and carbon emissions

Nuclear power has received renewed attention during the energy transition in recent years. This study is aimed to explore whether nuclear energy can promote economic growth without increasing carbon emissions. In order to have a more comprehensive understanding of the relationship between nuclear energy, economic growth, and carbon emissions, this study also discusses the impact of coal, oil, natural gas, and renewable energy on economic growth and carbon emissions. The second-generation panel unit root test, panel cointegration test, panel fully modified ordinary least squares, and Heterogeneous Dumitrescu and Hurlin causality test were used to estimate the long-term elasticity and causality among variables. Results based on panel data from 24 countries with nuclear energy from 2001 to 2020 show that both nuclear energy and renewable energy can curb carbon emissions. Especially in Canada, Finland, Russia, Slovenia, South Korea, and The United Kingdom, nuclear energy reduces carbon emissions more significantly than renewable energy. Meanwhile, there is a positive relationship between increased nuclear energy, increased renewable energy, and economic growth, which means that nuclear energy and renewable energy could increase economic growth as well. There is a positive relationship between increased oil, increased natural gas, and economic growth, while there is a negative relationship between the increase in coal and economic growth. Meanwhile, there is a positive relationship between increased oil, increased coal, and increased carbon emissions, while the positive relationship between increased natural gas and increased carbon emissions is not significant. Thus, in the 22 countries with nuclear power, increased coal consumption does not drive economic growth but increases carbon emissions. Increased oil consumption increases economic growth, but it increases carbon emissions. Increased natural gas consumption boosts economic growth but adds little to carbon emissions. In the authors' view, nuclear power and renewable energy are all options for these nuclear-power countries to pursue economic growth without increasing carbon emissions. Moreover, nuclear power has a better effect on curbing carbon emissions in some countries than renewable energy. Therefore, under the premise of safety, nuclear power should be seriously considered and re-developed.

The impacts of tourism development on income inequality: how does tourism capital investment contribute to income distribution? Tourism Agenda 2030

PropósitoEste estudio analiza el papel del desarrollo turístico en la disminución de la desigualdad de ingresos en el sur de Asia entre 1996 y 2020. Para ello, el estudio explora la conexión entre el desarrollo del turismo, la inversión turística, el crecimiento económico, la globalización del comercio y la desigualdad de ingresos.Diseño/metodología/enfoqueEste estudio utilizó diversas técnicas, como la dependencia transversal (DSC), la raíz unitaria, las técnicas de cointegración, los estimadores de la elasticidad a largo plazo y la causalidad a corto plazo entre las variables del estudio. Este estudio adoptó los errores estándar de Driscoll-Kraay y las estimaciones de causalidad de panel de Dumitrescu Hurlin.ConclusionesLos resultados del presente estudio revelan que el turismo tiene una asociación en forma de U invertida con la desigualdad de ingresos a largo plazo, lo que apoya la hipótesis de la curva de Kuznets. En cambio, la inversión de capital en turismo tiene una asociación negativa significativa con la desigualdad de ingresos. Al mismo tiempo, el crecimiento y la globalización del comercio afectan positiva y significativamente a la desigualdad de ingresos. Además, el desarrollo del turismo tiene una causalidad de retroalimentación bidireccional de la desigualdad de ingresos. Estos resultados también apoyan el “efecto precio” del turismo sobre la desigualdad de ingresos. Por lo tanto, este estudio proporciona más implicaciones prácticas con respecto a la formulación de políticas en materia de turismo y desigualdad de ingresos en las economías en desarrollo para apuntar a la Agenda 2030.Originalidad/valorEl presente estudio es único al considerar la dependencia transversal en la estimación del modelo que ha sido ignorada en estudios anteriores y aporta nuevas perspectivas a la literatura existente al investigar cómo el desarrollo del turismo y la inversión de capital en turismo contribuyen a la desigualdad de ingresos. Este estudio se centra en las economías del sur de Asia que han sido poco estudiadas y se extiende desde 1996 hasta 2020. Como resultado, este trabajo tiene más implicaciones prácticas para la formulación de políticas en la industria turística y la desigualdad de ingresos en las economías emergentes.

Re-examining money demand function for South Asian economies

This study explores the stability of the money demand function in South Asia using the cash-in-advance theory of cointegrated monetary predictors. Due to the stationarity of the variables, the study employs CS-ARDL (cross-sectional augmented autoregressive distributed lags), and the ARDL models for panel and country-specific analysis, respectively. The short- and long-term elasticities disclose robust and significant statistical evidence of a nexus between the real monetary aggregate and the predictors, in the panel and across South Asia. The findings also reveal that real income, the real exchange rate, and foreign interest rates positively influence the real monetary aggregate, whereas the domestic interest rate and the inflation rate have contractionary effects. Besides, the results indicate that the money demand function is stable in Bangladesh, Bhutan, India, Pakistan, and the Maldives, while the findings support only partial stability in Afghanistan, Nepal, and Sri Lanka. The findings suggest that South Asian countries make significant allowance for the vital substitutional effects of currency on domestic holdings when articulating monetary policies. It also suggests that South Asian countries may need to build stronger coordination with respect to their monetary attempts as a “regional bloc” rather than autonomous monetary policies.

Analisis Respon Penawaran Pisang di Provinsi Bali

Analysis of Banana Supply Response in Bali Province
 Banana is classified as horticultural plant that can grow well in Indonesia because the soil and climate are suitable for its growth. The research objectives were to analyse the factors that influenced the banana supply response in Bali Province and to analyse the elasticity of banana supply in Bali Province. This research was conducted in Bali Province. Determination of the research area with a purposive method secondary data is in the form of time series data for 10 years from 2010 to 2019. Types of data used include banana production data, harvested area data, banana prices, and competitor commodity prices. Analysis using multiple linear regression models. The results of this study indicate 1) The multiple linear regression model of banana supply in Bali Province is declared feasible in the classic assumption test of multicollinearity, autocorrelation, and heteroscedasticity. 2) The value of R2 adjusted is 0.887 which means that 88.7% is influential, the calculated F value is greater than the F table value. The t test analysis results show that only the banana production variable in the previous year has no effect. 3) The short-term and long-term elasticity values ??for banana prices are -0.2498 and -0.4143, Banana harvest area is 0.7909 and 1.3117, and the mango price is 0.5376 and 0.8916. Suggestions for the government to help make policies related to banana supply in Bali increase.

House price dynamics under lower leverage: the case of metropolitan cities in India

PurposeThis paper aims to examine the dynamics of house prices in metropolitan cities in an emerging economy. The purpose of this study is to characterise the house price dynamics and the spatial heterogeneity in the dynamics.Design/methodology/approachThe author explores spatial heterogeneity in house price dynamics, using data for 35 Indian cities with a million-plus population. The research methodology uses panel econometrics allowing for spatial heterogeneity, cross-sectional dependence and non-stationary data. The author tests for spatial differences and analyses the income elasticity of prices, the role of construction costs and lending to the real estate industry by commercial banks.FindingsLong-term fundamentals drive the Indian housing markets, where wealth parameters are stronger than supply-side parameters such as construction costs or availability of financing for housing projects. The long-term elasticity of house prices to aggregate household deposits (wealth proxy) varies considerably across cities. However, the elasticity estimated at 0.39 is low. The highest coefficient is for Ludhiana (1.14), followed by Bhubaneswar (0.78). The short-term dynamics are robust and show spatial heterogeneity. Short-term momentum (lagged housing price changes) has a parameter value of 0.307. The momentum factor is the crucial dynamic in the short term. The second driver, the reversion rate to long-term equilibrium (estimated at −0.18), is higher than rates reported from developed markets.Research limitations/implicationsThis research applies to markets that require some home equity contributions from buyers of housing services.Practical implicationsStakeholders can characterise stable housing markets based on long-term fundamental value and short-run house price dynamics. Because stable housing markets benefit all stakeholders, weak or non-existent mean reversion dynamics may prompt the intervention of policymakers. The role of urban planners, and local and regional governance, is essential to remove the bottlenecks from the demand side or supply side factors that can lead to runaway prices.Originality/valueExisting literature is concerned about the risk of a housing bubble due to relaxed credit norms. To prevent housing market bubbles, some regulators require higher contributions from home buyers in the form of equity. The dynamics of house prices in markets with higher owner equity requirements vary from high-leverage markets. The influence of wealth effects is examined using novel data sets. This research, documents in an emerging market context, the observations cited in low-leverage developed markets such as Germany and Japan.

R&D Human Capital, Renewable Energy and CO2 Emissions: Evidence from 26 Countries

This study examines the long-term relationship between carbon emissions and a number of researchers engaged in Research and Development (R&D), economic development, foreign capital inflows, renewable energy and population growth in 26 countries between 1995 and 2015. Pedroni’s panel cointegration test confirms the cointegrating relationship between the variables. Long-term elasticities are derived from FMOLS regression. Researchers in R&D and renewable energy are negatively and significantly related to carbon emissions. There is a positive and significant long-term relationship between GDPs per capita and CO2 and between the FDI and CO2. Dumitrescu and Hurlin’s panel causality test revealed unidirectional causality running from economic development to carbon emissions and feedback hypotheses between the FDI and CO2 and between renewable energy and CO2.