One-way Causality Research Articles

The Relationship between Health Expenditures and Renewable Energy Consumption in the Turkish Economy

Sustainable economic growth without harming nature is one of the top issues on the agenda of all countries recently. In this regard, renewable energy consumption is important for both sustainable economic growth and public health. Along with the environmental pollution caused by non-renewable energy sources, the consumption of renewable energy sources has become very popular in the global economy. In this direction, the relationship between renewable energy consumption and health expenditures for Türkiye was investigated using the 1990-2020 period data using the Toda Yamamato Causality analysis method. The findings show that there is a one-way causality relationship from renewable energy consumption to health expenditures. In addition, the findings revealed the existence of a one-way causality relationship from economic growth to health expenditures.

THE CALM-DOWN EFFECT: GOOD GOVERNANCE’S ROLE IN STEMMING THE TIDE OF CORRUPTION IN NIGERIA

Employing Toda-Yamamoto Granger causality technique, this study examined the relationship between public governance and corruption in Nigeria during the period, 1996-2022. In line with ex-post facto research design, secondary data (on yearly basis) on governance and corruption were obtained from Worldwide Governance Indicators and Transparency International respectively. The six governance indicators examined are control of corruption, government effectiveness, political stability/absence of violence, voice and accountability, rule of law, and regulatory quality, while corruption was measured using corruption perception index. Empirically, this study found that the existence of a unidirectional causality running from control of corruption-to-corruption perception index in Nigeria. This implies that good governance through the instrumentality of control of corruption is germane to stemming the tide of corruption. Likewise, there is a unidirectional causality flow from political stability to corruption perception index in Nigeria which suggests that political stability/absence of violence is instrumental to stemming the tide of corruption. Further evidence from causality test reveals that political stability had a one-way causality to control of corruption in Nigeria, which implies that to reinforce control of corruption as a governance instrument for stemming the tide of corruption; political stability is key. Moreover, voice and accountability, regulatory quality, and rule of law had a unidirectional causality with corruption perception index in Nigeria, thus suggesting the reinforcing role of regulatory quality, rule of law; and voice and accountability in promoting political stability. The study concludes that political stability/absence violence, and control of corruption are vital public governance measures for stemming the tide of corruption in Nigeria, thus indicating the ‘calm-down’ effect of good governance on corruption. It is therefore recommended that Nigerian government should intensify the tools of public governance in terms of control of corruption, and political stability, as well as voice and accountability, regulatory quality, and rule of law, in stemming the tide of corruption in Nigeria.

How Does Energy Consumption Affect Economic Growth in Saudi Arabia? A Cointegration Approach

Energy consumption is considered an important driver of economic growth in recent times due to its positive impacts on all economic activities. However, the Saudi Arabian economy has received very less attention from researchers as far as the energy-growth nexus is concerned. Amid this backdrop, the current paper is interested in assessing the responsiveness of economic growth to increased energy consumption in the presence of control variables. Our analysis of Saudi Arabia is based on date for the period 1971-2021. The recently proposed “Auto Regressive Distributed Lagged (ARDL)” cointegration approach is adopted for the estimation purpose. The estimation results revealed a significant positive short-run and long-run impacts of energy consumption on economic growth. The causality exercise also revealed a one-way causality running from energy consumption towards economic growth. Besides, energy consumption, we found that education and employment level have also a dominant positive role in promoting the economic growth of Saudi Arabia. On the other hand, openness to trade is found to be important for economic growth only in the long run confirming that trade liberalization policies could only be effective in the long run. Our results have important policy implications for the policymakers of Saudi Arabia.

The Impact of Exchange Rate Volatility on The Inflation Rate: Evidence from Turkey

Exchange rate volatility can directly impact the general price level by causing changes in the costs of imported goods and services. In developing economies such as Turkey, sensitivity to exchange rate movements can be more pronounced due to a high dependence on imports and external financing sources. In this study, the relationship between variables was analyzed within the framework of the VAR model using the logarithmic values of monthly data spanning from January 2003 to May 2024. The cointegration test revealed that the variables are cointegrated in the long run and do not move independently of each other. The Granger causality test found a one-way causality at the 1% significance level, where M1 money supply affects both the exchange rate and inflation, and inflation affects the exchange rate. Based on the results obtained from the VAR models, variance decomposition analysis indicates that in Turkey, the primary driver of inflation is changes in the M1 money supply. Impulse response functions reveal that the effect of inflation on the exchange rate lasts for eight periods and ceases after the eighth period. In contrast, the response of inflation to M1 money supply persists for ten periods, exhibiting a slight increasing and decreasing trend after the seventh period. Therefore, in the formulation of economic policies, the effects of exchange rate and M1 money supply on inflation should be carefully analyzed and appropriate strategies should be determined.

SUSTAINABLE DEVELOPMENT IN SOUTHEAST ASIA: THE NEXUS OF TOURISM, FINANCE, AND ENVIRONMENT

Southeast Asia's booming tourism and rapid economic growth create a unique setting to explore the interplay between economic development, tourism, and environmental sustainability. This study examines the complex interplay between tourism expansion, financial development, and environmental sustainability in Southeast Asia, specifically from 2000 to 2023. This research aims to fill gaps in previous studies, particularly within the Association of Southeast Asian Nations (ASEAN) context, and to provide a comprehensive understanding of how tourism and financial growth impact environmental outcomes in this region. The Autoregressive Distributed Lag (ARDL) model with Pooled Mean Group (PMG) specifications is utilized to analyze the long-term relationships between these factors while capturing the unique short-run dynamics of individual countries within Southeast Asia. The findings reveal intricate relationships spanning both short-term and long-term dynamics, highlighting the impact of tourism growth on environmental factors such as increased renewable energy use, Carbon Dioxide (CO2) emission, and ecological footprints. One-way causality from tourism, financial development, and renewable energy use to the ecological footprint is observed, alongside bidirectional causality between various factors. Policy implications emphasize the need for sustainable tourism practices and renewable energy integration. This research location's specific focus on Southeast Asia provides critical insights for policymakers aiming to balance economic growth with environmental conservation.

Asymmetric Nexus Between Shadow Economy and Financial Instability: Does Institutional Quality Matter?

Policymakers worldwide, especially central banks, are concerned about the causes and remedies of financial instability. This study examines the asymmetric influence of the shadow economy on financial instability. Moreover, the study analyzes the moderating role of institutional quality in the shadow economy and financial instability nexus. This study used novel econometric techniques, including RALS-ADF and RALS-LM unit root tests, RALS-Fourier ARDL, NARDL, and single Fourier-Toda and Yamamoto causality tests, using yearly data from 1984-2020 for Turkey. Specifically, a positive shock to IQ declines financial instability, while a negative shock to IQ promotes it. Further, the negative shock to SE lessens the financial instability. Moreover, the negative shock to the interaction term implies that the shadow economy outweighs the IQ (depending on the level of IQ) in its effect in the case of Turkey, i.e., even if IQ increases (which usually decreases financial instability), the increasing SE has a dominant effect, and eventually upsurges financial instability. Additionally, in line with the institutional failure hypothesis, the negative shock to interaction term leads to a substantial increase in financial instability. Finally, the findings showed a one-way causality that runs from economic growth to financial instability and bidirectional causality between SE and GDP. The government should reduce shadow economic activities in the economy by enhancing IQ, which can increase government revenue and reduce financial instability.

Do Education Expenditures Affect Economic Growth? Testing With Panel Data Analysis Method

Abstract The study aimed to examine whether education expenditures, basic education expenditures, secondary education expenditures and advanced education expenditures affect economic growth. In the study covering the duration 1990-2023, 6 major economies with complete data were considered. The econometric analysis first started with the correlation test of the series, and in the presence of correlation, the second-generation unit root test was applied, and in the absence of correlation, the first generation unit root test was applied. The presence of a cointegrated relationship in our research model allowed us to make long-term coefficient estimation. According to long-term coefficients, education expenditures, advanced and secondary education expenditures negatively affect economic growth; basic education expenditures have a positive impact. According to Dumitrescu and Hurlin Panel causality test; While a one-way causality relationship was detected between education expenditures, basic education expenditures, secondary education expenditures and economic growth; A bidirectional causality relationship was found between further education expenditures and economic growth.

Nuclear energy utilization and the expectations of emission-reduction gains: Empirical evidence from economic trajectory of selected utilizing states

As the global quest for clean energy grows, the environmentally friendly nature of nuclear energy as a potential non-fossil energy source is generating interest around the world. Therefore, we examine whether nuclear energy utilization has significantly driven carbon emission reduction among the utilizing states. Empirical analyses were conducted using second-generation techniques. The analyses conducted also incorporated testing the EKC theory, as well as examining the effects of natural resources and economic growth on emissions in the sample countries. The empirical analyses cover data from 2000 to 2020 for a total of 27 nuclear energy-using countries as obtained from the Statistical Review of World Energy (Bp, 2021). The findings show that neither the use of nuclear energy nor natural resources significantly reduces carbon emissions across the countries. Additionally, the EKC hypothesis of reduction in emission levels as income expands beyond a certain threshold does not hold for the countries. Moreover, the causality analysis shows that there is a one-way causality from emissions to nuclear energy use. These findings thus highlight the need for more research on how to minimize the indirect carbon footprint that is associated with nuclear energy utilization.

The Impact of Cryptocurrency and Electronic Money Use On The Circulating Money Supply and Monetary Stability in Indonesia

The purpose of this research is to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on the money supply (M2) in Indonesia, as well as to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on monetary stability (exchange rates) in Indonesia. The research method used is quantitative descriptive analysis with the Vector Error Correction Model (VECM) using the Eviews application and secondary data in the form of monthly data from 2011 to 2023 obtained from the official websites of Bank Indonesia and Finance. This study utilizes data on cryptocurrency transaction values and electronic money transaction values in Indonesia by analyzing the VECM model, which can observe the long-term and short-term impacts of the use of digital money on the money supply and monetary stability, in this case, viewed through the Indonesian exchange rate. The research results indicate that there is a one-way causality between electronic money and cryptocurrency, but not the other way around, and there is a one-way causality between the money supply and cryptocurrency, with the money supply as the dependent variable influencing cryptocurrency. The results of the VECM estimation indicate that in the long term, electronic money has a negative and sifnificant impact on the money supply. Meanwhile, the short-term estimation shows that both cryptocurrency and electronic money significantly influence the money supply, but their effects are dynamic and vary based on different lags. The long-term estimation with the exchange rate as the dependent variable shows that cryptocurrency does not have a significant impact on the exchange rate, while in the short term, both cryptocurrency and electronic money have a negative and significant effect on the exchange rate.

FDI Impact on China's Sectoral Performance: A Panel Cointegration and Causality Analysis

This study provides a thorough examine the influence of FDI inflows and outflows on China's economic growth across three major sectors. Using panel data from 1997 to 2022 in China, it utilizes tests for unit roots and cointegration to investigate the enduring connection between FDI and economic growth. The research results validate the existence of a long-standing cointegration relationship between FDI and economic expansion. Additionally, this research employs the Granger causality test to ascertain the direction of causality between FDI and economic growth. The study reveals a two-way causality between foreign direct investment (FDI) inflows and overall economic growth, which supports the hypothesis of feedback causality. Additionally, there exists a one-way causality originating from FDI inflows across various sectors, suggesting that growth attracts FDI. The government should encourage foreign investment to enhance the industrial structure and boost economic growth.

Pengaruh Tingkat Penggunaan Energi Listrik terhadap Pertumbuhan Ekonomi di Indonesia

Developing and developed countries rely heavily on the use of electrical energy to carry out social and economic activities. The purpose of this study is to analyze economic growth and its influencing factors in the period 2004-2023. This research uses time series data. The data method used is the VECM model. The results of this study indicate that there is a one-way causality relationship between variables. In the short term only CO2 emission variables affect economic growth, while in the long term all variables such as electricity and population can affect economic growth.

Assessing the Damage to Environmental Pollution: Discerning the Impact of Environmental Technology, Energy Efficiency, Green Energy and Natural Resources

The existing literature covers the topic of environmental pollution, but there is a scarcity of research that specifically examines the factors contributing to financial losses caused by carbon emissions. In this perspective, this ongoing analysis provides an understanding of the impact of environmental technology, energy efficiency, renewable energy consumption, natural resources, and economic growth on carbon dioxide damage in Organization for Economic Cooperation and Development (OECD) countries from 2000 to 2021 using the “Method of Moments Quantile Regression (MMQR)”, and “Dumitrescu–Hurlin (D-H)” causality test. The findings from the MMQR revealed that environmental control technology, renewable energy consumption, and energy efficiency contribute to reducing carbon dioxide damage at different quantiles. It was also found that economic growth and natural resources contribute to the increase in carbon dioxide damage in various quantities. Additionally, a one-way causality result was obtained from environmental technology, energy efficiency, renewable energy consumption, natural resources, and economic growth towards carbon dioxide damage. These results indicate that policymakers in OECD nations should provide suggestions on the efficient utilization of renewable energy sources and environmentally friendly technologies to minimize carbon dioxide damage.

The Relationship Between Sectoral Employment and Real Sector Economic Confidence: Fourier Causation Analysis

Purpose –In order to ensure economic growth in the short term and economic development in the long term, it is important to evaluate the events occurring in the political and economic order correctly and to meet the expectations. This study was created to evaluate the effectiveness of economic confidence on the relevant sectors on a sectoral basisDesign/Methodology/Approach –In this study, the relationship between the real sector economic confidence index and employment rates in industry, construction and services sectors will be analyzed. Turkey is selected as the sample and the data range subject to the analysis is determined as 2009:01-2023:08. In the study, the Fourier analysis method, which is among the new generation analysis methods, was applied, and Fractional Frequency Fourier Augmented Dickey Fuller Unit Root Test and Fourier Toda-Yamamoto Causality Test were applied.Findings –As a result of the application, a one-way causality relationship from the real sector economic confidence index to building and industry sector employment was determined. A recommendation should be made regarding the necessity of making political arrangements that will maintain the stability level of employment in the relevant sector.Discussion –In line with the data obtained in this study, the fact that real economic confidence has an effect on employment in the construction and industrial sectors, in addition to the fact that sectoral employment has no effect on the real economic confidence index, can be linked to the fact that sectoral leaders pursue a policy of contraction or expansion within the framework of expectations

The Retreat from BIST: Insights into Foreign Portfolio Investment Movements

The need for rapid growth and development in developing countries increases the demand for capital. As a result, foreign portfolio investments are of great importance, especially in emerging markets, as they help meet capital needs. However, their ability to move quickly also introduces high volatility to financial markets. This study examines changes in the share of foreign portfolio investors in Borsa Istanbul from 2004 to 2023, aiming to provide long-term insights to market participants. Initially, changes in the foreign portfolio investor ratio over time are graphically analyzed alongside the BIST 100 index and the average interest rate of deposits with a maturity of up to 3 months. These changes are evaluated in the context of both global and local developments. The study then investigates the causal relationship between the foreign portfolio investor ratio and the BIST 100 index using a cointegration test and a causality test based on the VECM model. The findings show a one-way causality from the BIST 100 index to the foreign portfolio investor ratio, indicating that foreign investors' market movements are largely influenced by the performance of the BIST 100, and local market dynamics significantly affect foreign capital inflows.

The moderating role of energy consumption in the relationship between trade openness and environmental degradation: evidence from Pakistan and China

Every country wants to accomplish the sustainable development goal. For this reason, each country protects the environment, expressing widespread concern over environmental degradation. Furthermore, trade is the most essential component of economic growth, and energy is the primary source of production and environmental degradation. Therefore, the study aims to investigate the moderating effect of energy consumption on the link between trade openness and environmental degradation in the case of China and Pakistan. It will utilise data from 1990 to 2020 and employ ARDL and Granger causality estimation techniques. This study revealed that energy consumption and GDP growth are constructive. At the same time, inflow, FDI, and trade openness have negative consequences on CO2 emission in China, while all the variables have positive effects on CO2 emission in the case of Pakistan. This study confirms the existence of the Environmental Kuznets Curve and the moderation effect of energy consumption in both countries. This study also found that there exists a one-way causality running from CO2 to energy consumption and trade openness to CO2 in the case of China. This study suggested focusing on screening and identifying environmentally friendly enterprises.

The Impact of Cryptocurrency and Electronic Money Use On The Circulating Money Supply and Monetary Stability in Indonesia

The purpose of this research is to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on the money supply (M2) in Indonesia, as well as to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on monetary stability (exchange rates) in Indonesia. The research method used is quantitative descriptive analysis with the Vector Error Correction Model (VECM) using the Eviews application and secondary data in the form of monthly data from 2011 to 2023 obtained from the official websites of Bank Indonesia and Finance. This study utilizes data on cryptocurrency transaction values and electronic money transaction values in Indonesia by analyzing the VECM model, which can observe the long-term and short-term impacts of the use of digital money on the money supply and monetary stability, in this case, viewed through the Indonesian exchange rate. The research results indicate that there is a one-way causality between electronic money and cryptocurrency, but not the other way around, and there is a one-way causality between the money supply and cryptocurrency, with the money supply as the dependent variable influencing cryptocurrency. The results of the VECM estimation indicate that in the long term, electronic money has a negative and sifnificant impact on the money supply. Meanwhile, the short-term estimation shows that both cryptocurrency and electronic money significantly influence the money supply, but their effects are dynamic and vary based on different lags. The long-term estimation with the exchange rate as the dependent variable shows that cryptocurrency does not have a significant impact on the exchange rate, while in the short term, both cryptocurrency and electronic money have a negative and significant effect on the exchange rate.

The international remittances and financial development nexus in CIVETS countries: Evidence from a panel quantile regression approach

International remittances are crucial financial sources for developing countries. Thanks to globalization, international remittances flows have increased worldwide and become the driving force of financial development. This paper investigates the role of international remittances on financial development for CIVETS countries, including Colombia, Indonesia, Vietnam, Egypt, Turkiye, and South Africa, over the period 2000-2022. The generalized panel quantile regression results indicate that international remittances positively affect financial development (FD) in all quantiles except the Q06 quantile. Trade openness (TO) has a positive effect on FD in all quantiles. Furthermore, economic growth contributes to FD in the Q01-Q05 quantiles and negatively affects in the Q09 quantile. However, foreign direct investment (FDI) has no statistically significant effect on financial development. In addition, the Dumitrescu-Hurlin panel causality results show a one-way causality relationship running from FD to TO and a two-way causality between FD and economic growth. Empirical findings demonstrate that international remittances promote FD in CIVETS countries. Therefore, attracting remittances into the financial sector is crucial for CIVETS countries.

Understanding the interplay of GDP, renewable, and non-renewable energy on carbon emissions: Global wavelet coherence and Granger causality analysis

This study examines the causality of Per Capita Gross Domestic Production (PGDP), Renewable Energy Consumption (REC), and Non-Renewable Energy Consumption (NREC) on Carbon dioxide (CO2) emissions at the global level utilising data gathered from 1995 to 2020 across various countries categorised based on income levels as High, Low, Upper Middle and Lower Middle and analysed through wavelet coherence. The findings reveal both bidirectional and unidirectional causality between the variables which have evolved. Globally, a bi-directional relationship is observed with a positive correlation between PGDP and NREC and in contrast, a negative correlation with REC. Furthermore, the analysis highlights varying causalities between CO2 emissions and PGDP, except for high-income and lower-middle-income country categories, all other shows one-way causality in different periods in the short term. Moreover, CO2 and REC, show unidirectional causality throughout the short-term, exceptionally medium & long term have both unidirectional and bidirectional causalities across all country categories with a positive correlation. In contrast, CO2 and NREC depict similar causalities to REC, however, with a negative correlation. A cross-country analysis was performed between CO2 and PGDP, CO2 and REC, and CO2 and NREC using Granger causality which shows mixed relationships. The findings hold significant implications for policymakers, providing valuable insights into the trade-offs between economic growth, energy consumption, and carbon emissions.

The Relationship between Agricultural Production, Agricultural Exports and Economic Growth in Türkiye: Cointegration and Causality Analysis

This study aimed to assess the influence of agricultural production and agricultural product exports on economic growth within the Turkish economy. To achieve this, annual data spanning from 1980 to 2022 were utilized to construct a model, employing the ARDL Bounds Test to discern the long-term cointegration relationship among variables and the Fourier Toda-Yamamoto Causality Test to determine causality relationships. The empirical findings from the ARDL Bounds Test indicate that increases in both agricultural production and agricultural product exports positively impact economic growth. Moreover, results from the Fourier Toda-Yamamoto Causality Test unveil a two-way causal relationship between agricultural production and GDP, while a one-way causality relationship is observed between agricultural product exports and GDP. Despite the declining share of the agricultural sector in GDP over the years in Turkey, these findings underscore the enduring importance of agriculture in driving economic growth and creating value. As potential solutions to Turkey's balance of payments challenges, strategies such as boosting domestic demand, expanding the domestic market, and augmenting agricultural sector contributions to foreign exchange earnings through agricultural export subsidies are proposed. Furthermore, efforts to mitigate income disparities between the agricultural sector and other sectors could foster socio-economic development in rural areas, thus promoting a more equitable distribution of national income across society.

The impact of renewable energy, eco-innovation, and GDP growth on CO2 emissions: Pathways to the UK's net zero target

In May 2019, the Climate Change Committee (CCC) recommended that the UK adopt a net-zero target, aiming to reduce its greenhouse gas emissions (GHG) by 100% from the 1990s baseline by 2050. The government accepted the recommendation, and the UK became the first major economy to establish a net-zero emissions law. To progress towards its climate objectives, the government took several initiatives, such as increasing its reliance on renewable energy sources and investing in climate mitigation technologies, which are commonly referred to as process eco-innovation. This study examines the impact of eco-innovation, process eco-innovation, renewable energy consumption, and economic growth on CO2 emissions in the UK using data from 1988 to 2020. We used the ARDL bound test with an error correction model (ECM) to examine the long-run and short-run cointegration between the variables of concern. We found that eco-innovation, process eco-innovation, and renewable energy consumption have significant roles in mitigating CO2 emissions, while economic growth contributes to environmental degradation in the UK. We also found that the effect of eco-innovation on CO2 emissions abatement is stronger than that of process eco-innovation in the short and long-run. Our robustness tests have confirmed the accuracy of those findings. In addition, the results from the Toda-Yamamoto causality revealed a one-way causality from process eco-innovation to CO2, renewable energy to CO2, and eco-innovation to CO2 emissions. Further, a bidirectional causality was found between GDP and CO2 emissions. The evidence presented in this paper provides great insight for shaping the energy policy in the UK and for establishing the climate budget in line with the country's net-zero target.