Panel Autoregressive Distributed Lag Approach Research Articles

Does energy transition reduce carbon inequality? A global analysis.

Energy transition from fossil fuels to renewables is instrumental in mitigating climate change. Low-income countries have a higher share of renewable energy in their total energy consumption than rich countries (WDI, 2023). Thus, it is imperative to examine the role of energy transition in affecting relative CO2 emissions between rich and poor sections of the societies across income groups of the countries. In this context, our study contributes by constructing the carbon inequality models with renewable and non-renewable energy consumption as prime explanatory variables separately for 114 countries over a data period 1990-2019. The models are estimated individually for high-middle-low-income countries by controlling for foreign direct investment (FDI), economic growth, and innovations. Starting with preliminary econometric operations, we employ the dynamic simulated panel autoregressive distributed lag approach and Driscoll-Kraay standard error regression for empirical investigation. We find that energy transition reduces carbon inequality globally. Innovation has a negative impact, economic growth has a positive impact on carbon inequality, and FDI has an asymmetric impact based on the income level of the countries. The crucial global policy implications are discussed.

How do R&D and remittances affect economic growth? Evidence from middle-income countries

Sustainable development through technical progress for middle-income countries (MICs) is overlooked in growth allied studies. Despite their crucial role in alleviating poverty and resource shortages, MICs encounter challenges in global economic competition, driving persistent efforts to find practical solutions. Therefore, this study explores the integrated impact of R&D expenditure and remittances on economic growth in MICs. Using data from 25 MICs between 1996 and 2021, this study employs the “2nd generation unit root” and “panel autoregressive distributed lag (ARDL)” methods. The “feasible generalized least square (FGLS)” techniques and the “Dumitrescu-Hurlin (D-H)” causality test are employed to verify the robustness of the panel ARDL estimation. The Westerlund cointegration tests confirm a long-term cointegration between variables. The findings of the panel ARDL approach show that R&D expenditure and remittances positively and significantly influence economic growth. The robustness of the panel ARDL results is confirmed by the FGLS estimation, which produces similar outcomes. The outcomes from the FGLS and the ARDL methods are additionally validated by the D-H causality check. Therefore, encouraging R&D and remittances is crucial to accelerate middle-income nations' economic growth. The study reveals a novel mechanism of R&D expenditures, remittances, and economic growth in MICs, shaping their mutual influence on this economic landscape. The study supports middle-income countries' policymakers in creating effective policies for their financial institutions regarding R&D expenditure and remittances.

Dynamics of resource allocation–firm performance relationship: Panel autoregressive distributed lag approach

Dynamics of resource allocation–firm performance relationship: Panel autoregressive distributed lag approach

A Dynamic Interrelationships among Clean Energy, Environmental Pollution, and Economic Growth in GCC Economies: A Panel ARDL Approach

The paper investigates the interplay between clean energy, environmental pollution reduction, and economic growth in the Gulf Cooperation Council (GCC) countries from 1980 to 2019, utilizing the autoregressive distributed lag (ARDL) method. The study underscores the global transition towards cleaner energy sources and its implications for the region. In assessing the determinants of economic growth, the findings reveal a positive and significant short- and long-term impact of energy production, with energy consumption exhibiting a positive and significant effect solely in the long term. The absence of a confirmed relationship in the short term is notable. Causality tests demonstrate a significant link from both energy consumption types to environmental pollution, alongside causal relationships from urbanization, energy production, and consumption to economic growth. Moreover, the results include the pivotal role of energy production in driving GDP growth, caution in short-term energy consumption effects, and significant causal links between energy consumption and environmental pollution. The recommendations to incentivize sustainable energy production, engage in long-term energy consumption planning, and adopt integrated urbanization policies provide actionable insights for policymakers. These suggestions are aimed at guiding the GCC countries in balancing the pursuit of economic growth with environmental sustainability—a delicate equilibrium that necessitates careful consideration of various factors.

Investigating the effects of trade openness on inclusive growth: evidence from the top five performing SADC members states

This study originates from the notion that trade openness promotes inclusive growth as it promotes economic growth. Hence, this study investigates the effects of trade openness on inclusive growth focusing on the selected SADC countries, aiming to inveterate the flow of inclusive growth. The study findings reveal that selected SADC countries require utilitarian policy to be formed in a country context to return responsive inclusive growth standards. The panel autoregressive distributed lag approach was employed from 2000 to 2020. This study has uncovered a shortage of inclusive principles within SADC, to promote inclusive growth. This study confirms that SADC-inclusive channels should be mended. This study contributes by narrowing the inadequacy gap set between SADC trade openness and inclusive growth. Besides its contribution to the field, the study is envisaged to offer insights into selected SADC member states policymakers to reconsider and prioritize benefits that are tied to inclusive growth through trade openness. The findings of this study provide an important scientific basis to the understanding of the relationship between trade openness and inclusive growth in the SADC region. The study plays an important supporting role by sensitizing policymakers and researchers interested in promoting equitable economic development through inclusive growth.

NEXUS BETWEEN INSTITUTIONAL QUALITY, EMPLOYMENT, TRADE OPENNESS & CO2 EMISSIONS: A PANEL ARDL ANALYSIS

This study employs a panel autoregressive distributed lag (ARDL) approach to investigate the relationships between employment, institutional quality, trade openness, and carbon dioxide (CO2) emissions. The analysis focuses on period from 2002 to 2021, encompassing top ten CO2-emitting countries: the United States, China, India, Japan, Russia, Iran, Germany, Saudi Arabia, South Korea, and Indonesia. Study explores how institutional frameworks, in conjunction with economic factors impact environmental outcome. Research emphasizes the potential of strong institutional quality to stimulate the trade, economic growth, and improvements in quality of life. Models developed in study predict an increase in CO2 emissions linked with higher institutional quality, economic development, energy consumption, industrialization, and trade openness. The findings highlight a significant correlation between the variables of institutional quality (IQ), employment (EMP), & trade openness (IMP) and CO2 levels over the long term. By employing a comprehensive panel ARDL approach, this study provides valuable insights into intricate relationships between institutional quality, employment, trade openness, & CO2 emissions.

Understanding the Relationship Between Foreign Direct Investment and Economic Growth in BRICS: Panel ARDL Approach

Foreign direct investment (FDI) has gained prominence in international economics over the past three decades. Primarily, the belief that FDI influences economic growth of the host country, set the stage for the empirical research focused on the FDI–growth nexus. The growth literature, however, reveals mixed evidence regarding the role of FDI in promoting growth. Despite the conflicting evidence, developed and developing economies have attached immense economic and political importance to FDI. It is noteworthy that BRICS (Brazil, Russia, India, China and South Africa) economies are representative developing economies and have emerged as significant FDI destinations, having witnessed an immense surge in inward FDI over the past few decades. It is against this backdrop that the present study attempts to assess the impact of FDI inflows and select macroeconomic variables, namely macroeconomic stability, human capital, financial development and trade openness (TO), on the economic growth of developing BRICS economies. The study examines both short-run and long-run relationships between FDI inflows, select macroeconomic variables and economic growth by employing the dynamic panel autoregressive distributed lag (ARDL) model, unlike most of the previous studies. For this study, secondary data covering a reference period of 32 years (1987–2018) were used. The data on GDP growth (GDPG), FDI inflows, inflation (INF), human capital, private sector bank credit (proxy for financial development) and TO have been collected from the World Investment Reports published annually by United Nations Conference on Trade and Development (UNCTAD) and World Bank (World Development Indicators). The findings revealed a long-run cointegration among FDI, host country characteristics (TO, human capital, financial development and macroeconomic stability) and economic growth in BRICS.

Analyzing the Impact of Foreign Capital Inflows on the Current Account Balance in Developing Economies: A Panel Data Approach

This research has explored the effects of foreign capital inflows on the current account deficit in developing countries from 1995 to 2020. The study considers various factors such as import demand, export demand, foreign direct investment, foreign debt, economic growth, foreign remittances, and foreign reserves as independent variables. The analysis utilizes the panel autoregressive distributed lag approach to examine both the long-run and short-run relationships between the dependent and independent variables. Moreover, the study employs the Panel Granger causality test to evaluate the causal connections among the selected variables. The results indicate that import demand, foreign debt, and remittance inflows positively affect the current account deficit in developing countries. Conversely, export demand, foreign direct investment, economic growth, and foreign reserves have a negative impact on the current account deficit. Consequently, it is recommended that developing countries prioritize the augmentation of stable and substantial foreign reserves as a strategy to alleviate the level of the current account deficit.”

Green economic recovery in central Asia by utilizing natural resources

In this research, the impacts of efficiency in natural resource utilization on green economic recovery are measured for the case of five Central Asian countries from 2000 to 2021 through the Panel ARDL (Autoregressive Distributed Lag) approach. The primary findings confirmed that for the industrial and agricultural sectors of the region, the efficiency of utilization of natural resources has a positive effect on green economic growth. In addition, the panel causality test confirmed a bi-directional causal linkage between green economic growth in industry and resource efficiency. In contrast, the efficiency in natural resource deployment causes green economic growth in the agricultural sector in Central Asia. The governments of Central Asia can follow practical policies like supporting green technologies and innovations, transferring green technologies from advanced countries, imposing a carbon tax, and greening mechanization of the agricultural sector.

Determinants of access to clean fuels and technologies for cooking in Africa: A panel autoregressive distributed lag approach

AbstractClean cooking fuels and technologies remain essential in addressing the climate crises, environmental degradation, deforestation, air pollution, health complications, and poverty. Nevertheless, many countries in Africa lack access to clean fuels and technologies for cooking. The extant literature remains scarce on the determinants of clean cooking fuels and technologies using macroeconomic indicators covering many African countries in a single study. This article addresses this gap using panel data from 38 African countries. The paper shows that rural population, particulate matter emission, and natural resources depletion significantly decreased access to clean cooking fuels and technologies in the long run while the gross domestic product (GDP) per capita significantly increased access to clean cooking fuels and technologies in the long run in Africa. The results show a bi‐causal relationship between clean cooking fuels and technologies and rural population, GDP per capita, natural resource depletion, and particulate emissions damage. Understanding the determinants of clean cooking fuels and technologies will expand insights into addressing challenges associated with particulate emission damages. Governments in Africa should target improvements in GDP per capita, promote advocacies, and advocate for investments to address the limited access to clean cooking fuels and technologies, particularly for the rural poor.

Impact of Remittance Inflows on Selected South-East European Economies: A Panel Auto-Regressive Distributed Lag Approach

Impact of Remittance Inflows on Selected South-East European Economies: A Panel Auto-Regressive Distributed Lag Approach

Sector Specific Determinants of Foreign Portfolio Investment Inflows in India: A Panel ARDL Approach

This article investigates the factors that influence foreign portfolio investment (FPI) inflows to various sectors in India from February 2012 to July 2020. We find evidence that in the short-run FPI inflows in India have a significant positive relationship with the index of industrial production (IIP), foreign direct investment (FDI) and market capitalization (MC) while a significant negative relationship with the US dollars exchange rate (DEXR) and real effective exchange rate (REER). The results of the panel autoregressive distributed lag (ARDL) approach show that sectoral FPI inflows to the various sector in India have a significant negative relationship with interest rate differential (IRD), MC and the US DEXR in the long run. However, in the long run, it has a significant positive relationship with international liquidity (IL) and REER. In addition, we observe that for all sectors the interest rate differential boosts FPI inflows in India except for new economy sectors. The policy prescription of the study points toward the creation of a conducive investment climate to encourage foreign portfolio investors.

Green finance, renewable energy, financial development, FDI, and CO2 nexus under the impact of higher education.

This research investigates the relationships between CO2 emissions, the economy, renewable energy consumption, green financing, and foreign direct investment in BRICS nations from 2000 to 2019 under the effect of higher education. The stationarity of the data was evaluated using three unit root tests: ADF-Fisher, Levin, Lin, and Chin and Im, Pesaran, and Shin. The panel autoregressive distributed lag approach identified the long-run and short-run elasticities. The empirical findings demonstrate that variables cointegrate. In the long run, renewable energy, economic growth, green finance, foreign direct investment, and higher education all influence CO2 emissions; however, in the short run, only economic growth, renewable energy, and higher education influence CO2 emissions. The findings also indicate that higher education increases dramatically at the individual and societal levels, reducing CO2 emissions in the short and long term. The overall empirical study of group and economy is supported by the results of robust statistics. In light of the results, the BRICS economies are advised to collaborate for sustainable growth while preserving environmental quality. Moreover, the BRICS countries should prioritize investing in the growth of higher education and enhancing the use of renewable energy for sustainable development.

Asymmetric effect of remittances and financial development on carbon emissions in sub-Saharan Africa: an application of panel NARDL approach

PurposeWhile several existing panel studies have focused on the linear specifications of the effect of remittances and financial development on carbon emissions, nonlinear panel studies on this subject remain thin on the ground. The purpose of this paper is to examine the asymmetric effect of remittances and financial development on carbon emissions in 31 selected sub-Saharan African countries for the period spanning from 1996 to 2018.Design/methodology/approachThe Kao, Pedroni and Johansen–Fisher co-integration tests were conducted to ascertain a long-run relationship among the studied variables, whereas the nonlinear panel autoregressive distributed lag approach was applied to account for asymmetries.FindingsThe study revealed, among other things, that remittances and financial development asymmetrically influence carbon emissions in the selected panel of sub-Saharan African countries. In the long run, the positive shock in remittances on carbon emissions is greater than in the negative shock in remittances. Additionally, both positive and negative shocks in financial development mitigate carbon emissions.Research limitations/implicationsThe implications of this study include the need to provide tax incentives to remitters and encourage them to invest in clean technologies so as to maintain sustainable development and low carbon emissions in the environment. There is also the need for governments and policymakers to formulate policies aimed at improving the functioning of the financial sectors in sub-Saharan Africa.Originality/valueThe positive and negative shocks of remittances and financial development on carbon emissions are examined to ascertain their asymmetric relationships.

The integrated impact of GDP growth, industrialization, energy use, and urbanization on CO2 emissions in developing countries: Evidence from the panel ARDL approach.

Developing economies are an important engine of world economic growth. However, ensuring the quality of environmental assets is maintained amid rapid economic change remains a major challenge for most developing countries. Using the Panel Autoregressive Distributed Lag (ARDL) approach and the heterogeneous causality test, this study analyzes the combined effects of energy usage, industrialization, gross domestic product (GDP) growth, and urbanization on CO2 emissions for 23 developing countries across the 1995 to 2018 period. From our analysis, the long-run results reveal that a 1% increase in energy use, economic growth, industrialization, and urbanization increases CO2 emissions by 0.23%, 0.17%, 0.54%, and 2.32%, respectively. Moreover, our model's short- to long-term equilibriums are adjusted at a yearly rate of 0.19%. Finally, to verify the panel ARDL long-run results, robustness tests were carried out using the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) approaches. Our results confirm that in the case of developing countries, CO2 emissions are primarily influenced by GDP growth, energy use, industrialization, and urbanization. Furthermore, the panel causality analysis identified a bidirectional causal relationship between energy use, GDP growth, urbanization, industrialization, and CO2 emissions. While these results can play an instrumental role in formulating CO2 emission policies among our selected countries, our research can also assist policy makers and stakeholders in other developing economies implement important policy initiatives. These include, tax incentives and infrastructural developments that nurture environmentally friendly industrialization, deploy low-carbon technologies, promote sustainable forms of urbanization and urban planning, while also facilitating increases in both the investment in and adoption of renewable energy platforms. The establishment of such a comprehensive policy agenda can help emerging economies achieve strong and environmentally sustainable GDP growth over the long-term.

The Economic Policy Uncertainty and Its Effect on Sustainable Investment: A Panel ARDL Approach

This study examines the effect of economic policy uncertainty (EPU) on sustainable investment returns by using panel data of stock market returns and the EPU index from twelve countries for the period from April 2015 to December 2020. In addition, precious metal prices, energy prices, and cryptocurrency prices are used as control variables. To do so, we investigate the impact of EPU, gold prices, oil prices, and Bitcoin prices on stock market returns by using the panel autoregressive distributed lag (ARDL) model to examine both the long-run correlation and short-run effect. Our findings show that EPU, gold prices, oil prices, and Bitcoin prices have a time-varying significant impact on sustainable stock market returns. We discovered that EPU has a significantly negative impact on the returns of the sustainable stocks in the markets over the long run. In contrast, the rise of the gold price, oil price, and Bitcoin price have a significantly positive impact on the returns of the sustainable stocks in the twelve sustainable markets in the long run. On the other hand, EPU in Singapore, Spain, the Netherlands, and Russia has a significant short-run impact on market returns in each country. Based on the findings, managers and investors in the sustainable stock markets are highly recommended to pay more attention to the volatility of EPU, gold prices, oil prices, and Bitcoin prices in the short run to control the risk of returns in the sustainable stock market. Furthermore, policymakers must closely monitor the movement of the EPU index, as it is a major driver of sustainable stock market returns.

Testing the Pollution Haven Hypothesis with the Role of Foreign Direct Investments and Total Energy Consumption

The main objective of this study was to examine the nonlinear relationship between environmental deterioration and foreign direct investment for subpanels based on the country’s income level. In this study, the model’s determinants were total consumption of energy and electricity consumption, the share of renewable energy, and economic growth. Due to the observation of cross-sectional dependence, utilization of cointegration tests and panel data unit root were incorporated, which confirmed a mixed integration order. For the compliance of long-run and short-run relationships among the variables, a pooled mean group estimator panel auto-regressive distributed lag approach was incorporated. The results of long-run development support the pollution haven hypothesis; hence, ecological footprint is increased by the activities related to foreign direct investments. The obtained findings depend on the different subpanels based on the income level of countries. For the assurance of economic development sustainability in the energy sector, along with the electrical energy sector, customized policymaking is suggested by this study based on the particulars of each subpanel.

The effects of non-renewable energy, renewable energy, economic growth, and foreign direct investment on the sustainability of African countries

This study explores the dynamic effect of non-renewable energy, renewable energy, economic growth, and foreign direct investment on environmental degradation in twenty selected African countries over the period 2000–2015. We have adopted Environmental Kuznets Curve hypothesis and the Pollution Haven/Halo hypothesis simultaneously. In the first stage, this paper performs cross-independence test and found cross-sectional dependence in carbon emissions, non-renewable energy, and renewable energy. In the second stage, it applies first generation and second generation unit root tests for panel data and found that all concerning variables are I(1) except for economic growth which is found I(0). Therefore, we used the Panel Autoregressive Distributed Lag approach using Pooled Mean Group, Mean Group, and Dynamic Fixed Effect estimators. The results indicate that all independent variables are significant and positive to CO2 emissions except for renewable energy found significant and negative to CO2 emissions, and foreign direct investment found significant and positive only in the long term. Moreover, the Environmental Kuznets Curve hypothesis did not hold in our sample, while we found strong evidence for the Pollution Haven hypothesis in selected African countries.

Impact of Investment in Tourism Infrastructure Development on Attracting International Visitors: A Nonlinear Panel ARDL Approach Using Vietnam’s Data

Investment in tourism infrastructure development to make destinations and services increasingly attractive is considered a key measure in developing a country’s tourist destinations. This paper investigates the impact of investment in tourism infrastructure components on international visitor attraction using data from Vietnam for the period 1995–2019. The results of analyzing panel data by the nonlinear Autoregressive Distributed Lag (ARDL) approach show that, in the long-run, investing in the three components of tourism infrastructure, namely transport and communications infrastructure, the hotel and restaurant industry, and recreation facilities, has a strong and positive impact on international visitor attraction. In addition, different short-run impacts of the three tourism infrastructure components on the whole market and each major international visitor market are also found.

Impact of Environmental Tax on Comparative Advantage of Food and Food Products: A Study of G20 Countries in Light of Environmentally Sensitive Goods

Many countries are under constant fear that environmental policies might negatively influence the international competitiveness of polluting industries. In this study, we aim to evaluate the relationship and impact of the environmental tax on comparative advantage of trade in food and food products industry, considered to be one of the highly environmentally sensitive industries. This study also investigates, whether this relationship differs among countries covered in G20, with the help of correlation analysis. We select panel autoregressive distributed lag approach for this study as it can analyse long-run as well as short-run association even when the variables are stationary at different orders of integration. Using panel data from G20 countries over the period of 21 years that is from 1994 to 2015, it is concluded that when we allow environmental taxes to interact with the revealed comparative advantage (RCA) of G20 nations, the overall impact of the environmental tax on the RCA is negative in the long period. It is therefore suggested that countries should follow Porter hypothesis to stimulate innovations resulting from strict environmental regulations that affect the environment in least possible manner. JEL Codes: C01, C23, C33, F18, O57, Q5