Pooled Mean Group Estimator Research Articles

Banking for Climate Risk Mitigation: An Investigation of the Role of Green Digital Finance

The businesses facing contains accessing finance when adopting sustainable practices in business operations. Digital finance is a tool to reduce financial constraints imposed by traditional financial systems. This study investigates the role of green digital finance in reducing climate risk using balanced panel data from South Asian economies. The study utilized a pooled mean group estimation approach to measure the impact of digital finance on climate risk in the presence of green innovation. The findings revealed that green digital finance mitigates climate risk and green innovation plays a significant role in enhancing the relationship. This study provides robust recommendations and policy implications

Does Insurance Sector Matter for Economic Complexity?

The study examines the impact of the insurance market on economic complexity in 28 OECD nations within a period of 1995–2020. The study also examines whether the impact of life insurance on economic complexity would be different from that of the non-life insurance sector within the insurance market. The results based on pooled mean group (PMG) estimators reveal that the insurance sector influences economic complexity positively. This finding is further substantiated after employing panel co-integrating regression and method of moment quantile regression (MM-QR). The study concludes that the insurance sector is a key instrument in upgrading the economic complexity of an economy. Since the distributional impact of economic complexity also depends on economic and financial risk, the insurance sector can assist in mitigating the risks and uphold the productive knowledge structure needed to enhance national product sophistication.

Exploring the impact of public investment on income, energy consumption, and CO2 emissions in ASEAN: new insights from a panel cointegration approach.

Policy adjustments can help strike a balance between economic growth and environmental sustainability, which has increasingly been the heart to nations and regions throughout the World. This paper examines how public investment affects economic growth, energy consumption, and CO2 emissions in eight ASEAN countries: Cambodia, Myanmar, Malaysia, Indonesia, the Philippines, Singapore, Thailand, and Vietnam. Extension of a Cobb-Douglas production function and application of panel cointegration techniques reveal bidirectional Granger causation between public investment and both private development and CO2 emissions from 1980 to 2019. Public investment Granger causes energy usage, the opposite does not hold statistically. More findings from pooled mean group estimations show a mean-reversion dynamic that corrects disequilibria by 14% yearly. State investment crowds in private sector growth, energy use, and carbon footprint. It also finds an inverted U-shaped relationship between public investment and energy consumption, and a U-shaped relationship between public investment and CO2 emissions, indicating complex regional interactions. It is suggested the implementation of public investment policies that enrich green infrastructure projects to foster growth while minimizing environmental impacts, and encourage a strategic approach to public investment for prioritizing environmental sustainability and thus, achieving Sustainable Development Goals 7 to 9 and 11 to 13 in this region.

Energy Transition, Human Development and Energy Justice in the Southern Countries

Energy poverty deteriorates the human capital and the growth potential in the developing and emerging countries. We estimate the long-run effect of electricity access, modern renewable energy consumption, and traditional renewable energy consumption on human development (index). We use an AutoRegressive Distributed Lag/ARDL model based on pooled mean group estimation for a panel of 44 southern countries, representing three energy-poor regions of the world over the period 1990-2018. By distinguishing two groups of countries according to their level of HDI, we show that it exists a positive and significant relationship between electricity access and human development in countries with low and medium HDI and a positive effect of modern renewable energy on the level of human development in countries with higher HDI. In addition, the estimations reveal a significant negative effect of conventional renewable energy use on human development for the two countries groups.

Realizing sustainable development goals in sub‐Saharan Africa: The role of industrialization on consumption‐based carbon emission

AbstractThe study analyzed the linkage among industrialization, trade openness, and consumption‐based carbon emissions in Sub‐Sahara Africa (SSA) to establish how Sustainable Development Goals (SDG) 8 and 9 can be achieved without negatively affecting the climate—SDG 13. Based on insights drawn from the environmental governance and economic integration theories, we developed a model that connects industrialization, trade openness and consumption‐based carbon emission in SSA, as the region strives to balance development with climate protection. We used purposive sampling to select 30 out of 46 countries in SSA with readily available data on the International Energy Agency and the World Development Indicators databases from 2000 to 2021. The study utilized the dynamic common correlated effect and the pooled mean group estimators for the empirical analysis. The results revealed that industry growth has an affirmative link with consumption‐based carbon emissions. Similarly, urban growth recorded a positive association with carbon emission. Moreover, trade openness positively moderates the link between industry growth and carbon emissions. The findings affirm the need for strengthening policies and regulations to promote industry growth (SDG 9), while ensuring climate protection in SSA to achieve SDG 13.

Digitalization and the environment: The role of information and communication technology and environmental taxes in European countries

AbstractThis study examines the impacts of digitalization through information and communication technology (ICT) and environmental taxes on greenhouse gas (GHG) emissions in 23 European Union (EU) countries between 2000 and 2017. Using the Pooled Mean Group estimator, the empirical results provide evidence that ICT development and environmental taxes improve environmental sustainability while research and development investments and income per capita deteriorate environmental sustainability. Furthermore, the results based on the Dynamic Panel Threshold Regression model show that the relationship between ICT and GHG emissions is dependent on the level of environmental taxes. During the period of low environmental taxes, the effect of ICT on GHG emissions is positive and insignificant but once environmental taxes cross the threshold value, the effect of ICT becomes negatively related to greenhouse gas emissions. This suggests that the period of low environmental taxes does not support the environmental friendliness of ICT development in the European region. The policy implication of these findings is that ICT, environmental taxes, and renewable energy can be possibly stirred up to achieve long‐term environmental sustainability in the EU region.

Value added tax and household consumption in Sub-Saharan Africa: Evidence from Nigeria and South Africa

This study focuses on Nigeria and South Africa and examines how value added tax (VAT) affects household consumption in sub-Saharan Africa. We use time series data from 1994 to 2021 as well as panel Autoregressive Distribution Lag (ARDL) regression through pooled mean group estimation. The findings show that in the long -run and with a 0.05 degree of materiality, VAT has a significant positive influence on household consumption and the exchange rate significantly depletes household consumption. In the short term, at 10% importance, VAT has a significant impact on household spending. According to the Error Correction Model (ECM), there will be a short-run return to equilibrium of 93.7%. According to the country specific results for Nigeria, VAT at 10% has a significant positive impact on CPI but at lag 3, CPI has a significant negative reaction to VAT and the Exchange rate (EXG). EXG has a significant positive influence on CPI at lags 1 and 2. For South Africa, CPI affects itself positively and significantly at lags 1 and 2 but VAT appears to be harmfully unimportant whereas EXG affects CPI positively and significantly at lags 1 and 3 but becomes minor at lag 2. The study concludes that VAT implications are detrimental to households in the short run despite having a positive impact in the long term. As a result, the study recommends adequate public awareness prior to VAT implementations as well as zero VAT for basic household goods and services in African regions that have yet to implement such policies.

External Debt, Institutional Quality and Economic Growth in East African Countries

This study aimed to analyze the impact of external debt on economic growth with mediating role of institutional quality by employing a heterogeneous panel Autoregressive distributed lag (ARDL) model through a pooled mean group (PMG) estimator over periods of 22 years spanning from 1998 to 2019 in East African countries. The finding reveals a significant long-term positive relationship between the stock of external debt as a percentage of GNI and economic growth. However, its square revealed a significant long-term negative relationship, suggesting a non-linear relationship. The positive effect of external debt on economic growth is limited to a threshold level of 62.9%. According to the error term’s coefficient, the rate at which short-run returns to long-run equilibrium became disequilibrium in the current year was 45.5%. Furthermore, the result shows that institutional quality’s indirect effect on external debt interaction had a significant positive impact on economic growth, indicating that the negative impact of external debt on economic growth decreased as the region’s institutional quality rose. Therefore, a comprehensive improvement in institutional quality is required to both lessen the negative effects of external debt and maximize the benefits of government borrowing. In order to stabilize the external debt, governments should cut back on wasteful spending and uphold sound fiscal management.

Euro Switch and Shadow Economies

ABSTRACT This paper studies the effect of euro adoption on the shadow economies of a group of European Union member countries using pooled mean group estimation. Controlling for macroeconomic factors and conducting several robustness checks, our results indicate that euro adoption has a negative association with the size of the shadow economy for this particular group of EU countries. We speculate this relationship may be due to increased transparency in financial markets, more government regulation post-euro adoption, or more legal-sector opportunities post-euro adoption. European countries considering euro adoption may find the results useful in making their final decision regarding currency adoption.

How does population aging affect China's energy consumption?

In China, the proportion of elderly population is growing, influencing economic development and energy consumption. Our study investigates the relationship between population aging and energy consumption in China from 1997 to 2020, considering both short and long-term effects. The analysis employs the pooled mean group (PMG) estimation and explores the underlying mechanisms using mediating effects and threshold effects models. The PMG results reveal a negative long-term impact of population aging on energy consumption, indicating that a 1% increase in population aging leads to a 0.348% decrease in energy consumption. Additionally, GDP per capita and capital stock exhibit positive correlations with energy consumption, while the industrial structure shows a negative correlation. Technological progress is found to significantly increase energy consumption. The mechanism analysis suggests that the mediating role of scale and technological effects contributes to the negative effect of population aging on energy consumption. Furthermore, a nonlinear relationship between population aging and energy consumption is observed, influenced by both population size and technological progress. The policy implications call for a comprehensive approach that addresses elderly population growth, enhances energy efficiency, and promotes sustainable technologies to ensure sustainable economic development.

The Impact of Climate Change on Agricultural Employment, Evidence from South Asian Countries based on Pooled Mean Group Estimation of Dynamic Heterogeneous Panel

Being the most populous region, South Asia is home to one-fourth of the population in the world. Along with the aforementioned feature, South Asia is becoming one of the most climatic-hazard-prone regions on the planet. Hence, this study attempts to analyse empirically how economic performance and climate change affect employment in the agriculture sector. The study includes seven South Asian countries’ data, excluding the Maldives, from 1992 to 2021 by applying the most widely used Panel ARDL, which involved pooled mean group (PMG) estimation. In the short run, the effect of past-year employment and temperature is positive, whereas GDP per capita is negatively related to agricultural employment and rainfall is insignificant. However, in the long run, the error correction coefficient is significant, and overall data has been able to establish a long-run relationship. The study concludes that, with the long-run impact for each country, agricultural employment is negatively affected by GDP per capita and temperature. Lastly, the effect of temperature in the long run reveals that climate change has long-term impacts on agriculture employment. We believe that the findings of the study have important implications for policymakers in the future.

Impact of Company Income Tax Revenue on Economic Growth of selected West African States (an application of the Dynamic Panel ARDL)

The study seeks to investigate the impact of company income tax on economic growth in selected 15 West African countries using the panel ARDL from 2002-2021. Based on the outcome of the hausman test, the study chose the Pooled Mean Group (PMG) because the probability Value is greater than 5% level of significance. PMG estimator assumes only ' are same across group that is, only the long run estimators are the same or homogenous and short run estimators varies. The data are found to be stationary at first difference. And the correction result shows that there is no problem of multicollinearity. The study found out that there is a long run relationship between company income tax and economic growth. The ECT coefficient is negative for Nigeria, Ghana, and Sierra Leone, indicating that these countries converge to their long-run equilibrium at a rate of 0.9%, 95.2%, and 39.4%, respectively, per period. the short-run impact of various variables on the dependent variable for Group B countries, namely Senegal, Burkina Faso, Guinea Bissau, Guinea, and Cote d'Ivoire. The model appears to include a lagged dependent variable (ECT) as well as a set of explanatory variables including D.CIT, D.FDI, D.POP, D.FID, and D.TOP. with negative coefficient indicating that these countries converge to their long-run equilibrium. And same with group C. In conclusion, the impact of company income tax revenue on economic growth in selected West African states, as examined through the panel ARDL framework from 2002 to 2021, has been found to be significant. The study reveals that there is a positive and statistically significant relationship between company income tax revenue and economic growth in the selected West African countries. The study also found evidence of short-run dynamics and long-run equilibrium in the relationship between the two variables. This suggests that an increase in company income tax revenue can have a positive impact on the economic growth of these nations. The study recommended that, policymakers in selected West African states should adopt a multi-pronged approach that focuses on increasing company income tax revenue, promoting trade openness, attracting foreign direct investment, and improving human capital development. By doing this, they can ensure sustained economic growth and development in their countries.

The exposure-response of air pollution and climate change to chronic respiratory diseases: Does residential energy efficiency matter?

Promoting energy efficiency is crucial for reducing energy consumption, yet its impact on human health remains discussed. This study examines the relationship between household energy efficiency, ambient air pollution, climate change, and mortality risk from chronic respiratory diseases. The study collected observational data in six major cities in Taiwan from 2008 to 2020. The energy efficiency level was determined using the input demand function derived from the stochastic frontier analysis (SFA). Subsequently, analysis was conducted employing a dynamic panel data model and a pooled mean group estimator. The study's findings indicate that enhancing household energy efficiency decreases the mortality rate associated with chronic respiratory diseases. Specifically, at the highest level of energy efficiency (99%), the relative risk reaches its lowest value of 0.639 (95% CI: 0.58–0.70). Additionally, a positive exposure-response relationship is observed between degree days and ambient air pollution (PM2.5, PM10, and SO2), associated with an increased risk of death from chronic respiratory diseases. These results underscore the importance of initiatives to enhance energy efficiency programs in households, particularly in metropolitan areas.

Too poor to be clean? A quantile ARDL assessment of the environmental Kuznets curve in SADC countries

The purpose of this study is to investigate whether there is a fit of the environmental Kuznets curve for Southern African development community (SADC) countries. To this end, we estimate a quadratic regression between greenhouse gas emissions (CO2, N20, CH4), per capita income and other controls, using the pooled mean group (PMG) and quantile autoregressive distributive lag (QARDL) models applied to annual data spanning from 1990 to 2021. On one hand, the PMG (Pooled mean group) estimators reveal an EKC fit for CO2 emissions (turning point = $4675), an inverse EKC for CH4 emissions (turning point = $6310) and no fit for the N20 emissions. On the other hand, the QARDL estimators further reveal more significant effects existing at the tail end distributions of the curve for all classes of emissions with turning points in the upper (lower) quantiles being higher (lower) than those from the PMG estimators. Further analysis informs us that only Seychelles have crossed the EKC ‘turning point’ at the upper quantile while the remaining countries are ‘too poor to go green.’ Overall, these findings have implications for the debate on climate justice in Africa.

Government expenditure impacts on financial development: Do population age structures moderations matter?

PurposeThis study examined the roles of public spending and population moderating characteristic structure of selected African economies on bank-based financial development through credit to private sector.Design/methodology/approachThe study sampled 37 selected African economies for the years 1991–2018, and it applied a pooled mean group (PMG) estimator to account for short-run and long-run causal effects, and confirmed short-run adjustments towards the long-run convergences between the variables. Specific suitable tests were also applied.FindingsEvidence confirms positive impacts of both capital formation and final consumption expenditures on financial development in the short run and long run. The moderation of population structures on expenditure structures help to speed up convergences.Originality/valueThis work attests its innovation by accounting for the separate effects of the expenditure types, the moderation effects of young and mature populations for capital and final consumption expenditure on financial development among selected economies in Africa.

What is the global causality among renewable energy consumption, financial development, and public health? New perspective of mineral energy substitution

Under the background of global warming and economic globalization, energy structure transformation and financial liberalization have become hot issues of global concern. Additionally, the replacement of renewable energy sources for mineral energy is placed great expectations to reduce environmental pollution and promote public health. Although the effects of renewable energy consumption (REC) and financial development (FD) on public health (PH) have been verified by researchers, the long-term causality among the three has not been explored, especially from global evidence. To verify the long-term relationship and causality among REC, FD, and PH at the global level, using annual panel data for 136 nations from 2000 to 2018, this paper employs the Cross-sectional dependence test, CADF unit root test, the second generation cointegration test, Pooled Mean Group estimation, and the Granger causality test. This paper finds some interesting results. First, the long-term co-integration relationship and the two-way causal relationship are among REC, FD, and PH. Second, REC and FD have a long-term promoting effect on PH, but have no significant effect in the short term. This conclusion holds up after a series of robustness tests. Third, there is heterogeneity in the long-term impact of REC and FD on PH. The long-term PH benefits of REC are more vital in low-polluting countries, trade-open countries, poor-institution countries, and non-emerging market countries, while FD has a long-term negative impact on PH in high-polluting and trade-tight countries. Based on the above results, we believe that it is necessary to formulate appropriate energy policies and financial policies according to local conditions. In summary, our results provide essential policy recommendations for energy transformation and public health improvement in countries around the world in the process of financial liberalization.

A comparative study of renewable and fossil fuels energy impacts on green development in Asian countries with divergent income inequality

The paper aims to analyze the impacts of renewable and non-renewable energy resources on the Sustainable Development Index in 16 Asian countries with a high GINI index and 13 Asian countries with a low GINI index from 2000 to 2021, utilizing the ARDL (Auto Regressive Distributed Lag) - PMG (Pooled Mean Group) estimation approach. Empirical evidence suggests that fossil fuel has a detrimental effect on the Sustainable Development Index. Conversely, the development of clean energy shows only short-term positive effects in Asian countries with a low GINI coefficient. Notably, green financing emerges as a crucial contributing factor to the Sustainable Development Index. To implement practical policies, it is essential to focus on developing green financing tools within digital platforms and leveraging Fintech capabilities. Furthermore, expanding financial inclusion and enhancing economic resiliency status are identified as critical strategies to bolster the Sustainable Development Index.

ICT's impact on CO2 emissions in GCC region: The relevance of energy use and financial development

This study looks into ICT's asymmetrical impact on emissions of carbon dioxide (CO2) controlling energy use and financial development (FD) in GCC countries. It uses panel data covering 1995–2019, employs 2nd generation unit root and Westerlund cointegration tests, and applies panel-pooled “generalized least square (GLS)” techniques. The “pooled mean group (PMG)” method and the “Dumitrescu-Hurlin (D-H)” causality test are employed to verify the robustness of GLS estimation. The bootstrap cointegration test corroborates a long-run cointegration among variables. GLS findings exhibit an asymmetric relation between ICT and CO2 emissions; both the affirmative and negative shocks of ICT and FD are associated with decreased CO2 emissions, while energy use enhances the latter. Hence, promoting ICT is essential to reduce CO2 discharges in the GCC region due to its large negative stimulus on CO2 emissions. The PMG estimation also produces findings similar to those of the GLS outcomes and verifies the GLS outcomes' robustness. The D-H causality check also validates the GLS and PMG outcomes.

Public Debt, Current Account Balance, and Fiscal Balance: The Threshold Effects in Selected ASEAN Countries

Indebtedness is a huge global issue faced by all economies around the world since the older time until today. The high and increasing debt levels have become a concern, and public debt has become the core of the turmoil that began a few years ago. When the government's spending in a year exceeds its revenue, there will be a budget deficit for that fiscal year. Hence, it must use debt to fill the funding gap. This situation creates an annual deficit, which cannot end until the accumulated debt becomes unsustainable and the government's finances collapse. Hence, this study is aimed to assess the impact of the public debt threshold on current account balance and fiscal balance in selected ASEAN countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam) by adopting annual data from 1990 to 2021. In panel long run estimation by pooled mean group (PMG) estimator, public debt affects twin balances to have a positive relationship. In the empirical analysis, the single threshold sample splitting model is employed to assess the impact of the public debt threshold on the current account balance and fiscal balance either below or above the threshold level. The outcomes indicate that the public debt threshold level is at 63.36%. When the public debt threshold is below 63.36%, there is a negative relationship between the current account balance and fiscal balance; whereas when the public debt threshold is higher than 63.36%, there is positive nexus between the current account balance and fiscal balance. This result implies the situation of twin divergence situation when exceeding the public debt threshold level.

Rethinking the governance of geothermal power industry: The roadmap for sustainable development

The European geothermal heating market, at one time dominated by only a handful of countries, is set to experience a purple patch in the coming years as governments scramble to find an affordable alternative to expensive gas-fired heating. The primary focus of this study will be to investigate what effect will worldwide governance factors and economic growth on the geothermal energy output among the 27 European Countries from the time being 1996 to 2021. Using the autoregressive distributed lag, the findings shows that a significant increase in the geothermal energy industry sustainability can occur in European Union 14 (EU14) emerged economies using worldwide governance factors than in EU13 emerging economies. Among additional factors, instability in the political realm, regulatory issues in the area of quality, accountability, and voice-related issues, and the ability to curb corrupt practices contribute more positively to geothermal energy sustainability in EU14 emerged economies than in European Union 13 (EU13) emerging economies. On the other hand, government effectiveness contributes more positively to geothermal energy sustainability in EU13 emerging economies than in EU14 emerged economies. The finding implies that geothermal power sustainability in EU region countries can be significantly increased by mounting the level of worldwide governance determinants to achieve Energy Union aims by 2030. This will finally be spread to combat climate change and environmental pollution. All observations on projected calculations are valid. The confirmation was achieved with the aid of the three estimators used in the study which are the pooled mean group estimator, the mean group estimator, and the third one was dynamic fixed effect approach. This study recommended that these European countries need to put more effort in terms of being effective in worldwide governance indicators which will help in goal attainment at the societal and environmental levels. Those in charge of making laws in the European countries should get more engaged in worldwide governance scopes as this will assist in facilitating the security and sustainability of geothermal energy generation. Those in charge of making policies in the EU countries should as well lay more emphasis on the strategies that could be cointegrated and as well sustainable toward worldwide governance fractionation toward the achievement of the sustainability of geothermal power and this will drastically reduce the need or dependence on fossil fuel and emissions coming from carbon dioxide in the future time.