Analysis of the Relationships among Financial Development, Economic Growth, Energy Use, and Carbon Emissions by Co-Integration with Multiple Structural Breaks
Abstract
:1. Introduction
2. Literature Review
3. Materials and Methods
3.1. Econometric Methodology
3.2. Testing for Cross-Section Dependence
3.3. Co-Integration Test
3.4. Long-Run Coefficients
4. Empirical Findings
5. Policy Implications and Conclusions
- 1.
- 2.
- 3.
- As a result of the specified findings, we primarily demonstrated that financial growth has a significant effect, along with economic development, on energy use and carbon emissions. Therefore, energy economists should consider the influence of financial development on these factors in the future studies.
- 4.
- The findings of our analysis demonstrated a positive sign for the coefficient between financial development and economic growth, implying that these concepts are realized with a high risk of environmental pollution. Moreover, the analysis revealed that financial development in particular accelerates the environmental pollution rate. The fact that carbon emissions are determined by financial development and economic growth is also another finding of the analysis. Therefore, policy-makers in emerging markets should take the required steps to reduce carbon emissions while increasing financial development.
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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GDP | EU | CO2 | MCAP | |||||
---|---|---|---|---|---|---|---|---|
Test Statistic | Value | Prob | Value | Prob | Value | Prob | Value | Prob |
CDLM1 | 224.773 * | 0.000 | 223.761 * | 0.000 | 184.329 * | 0.003 | 296.398 * | 0.000 |
CDLM2 | 5.381 * | 0.000 | 5.343 * | 0.000 | 3.041 * | 0.002 | 9.562 * | 0.001 |
CDLMADJ | 45.263 * | 0.000 | 24.023 * | 0.001 | 17.632 * | 0.008 | 41.636 * | 0.005 |
LLCt-stat | IPSW-stat | CIPSstat | HK | |||||
---|---|---|---|---|---|---|---|---|
Intercept | Intercept + Trend | Intercept | Intercept + Trend | Intercept | Intercept + Trend | Intercept + Trend | Intercept + Trend | |
GDP | −7.01 * | −9.98 *** | −7.73 ** | −10.89 *** | −4.02 * | −4.59 ** | 11.94 * | 14.81 * |
EU | −4.63 ** | −8.29 *** | −4.72 ** | −12.80 *** | −2.98 * | −2.80 ** | 7.17 ** | 8.42 ** |
CO2 | −7.84 * | −9.55 ** | −2.84 * | −5.74 * | −9.95 ** | −10.66 *** | 21.87 ** | 24.85 *** |
MCAP | −1.04 * | −2.74 * | −1.24 | −2.66 * | −2.32 * | −3.92 ** | −1.01 * | 11.97 ** |
Test | Cointegration Test | |
---|---|---|
No breaks | Value | 9.003 |
p-value a | 0.056 | |
p-value b | 0.898 * | |
Breaks | Value | 9.889 |
p-value a | 0.000 | |
p-value b | 0.995 * |
PMG | MG | Hausman Test | |
---|---|---|---|
Long-run coefficient | |||
GDP | 0.04 * | 0.02 ** | 7.56 * |
EU | 0.23 *** | 0.17 ** | 6.55 *** |
CO2 | 0.77 ** | 0.91 * | 8.78 ** |
MCAP | 0.96 ** | 1.04 ** | 3.21 ** |
Error correction coefficient | |||
Ø | −0.995 * | −0.990 * | |
Short-run coefficient | |||
∆GDP | 0.05 *** | 0.03 ** | |
∆EU | −0.02 * | 0.07 * | |
∆CO2 | 0.04 ** | 0.75 ** | |
MCAP | 0.17 * | 0.21 ** | |
Diagnostics | |||
Log-likelihood | 253.92 | 302.03 | |
χ2SC | 7.27 | 9.23 | |
χ2HE | 0.78 | 0.71 |
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Geyikci, U.B.; Çınar, S.; Sancak, F.M. Analysis of the Relationships among Financial Development, Economic Growth, Energy Use, and Carbon Emissions by Co-Integration with Multiple Structural Breaks. Sustainability 2022, 14, 6298. https://doi.org/10.3390/su14106298
Geyikci UB, Çınar S, Sancak FM. Analysis of the Relationships among Financial Development, Economic Growth, Energy Use, and Carbon Emissions by Co-Integration with Multiple Structural Breaks. Sustainability. 2022; 14(10):6298. https://doi.org/10.3390/su14106298
Chicago/Turabian StyleGeyikci, Umut Burak, Serkan Çınar, and Fatih Mehmet Sancak. 2022. "Analysis of the Relationships among Financial Development, Economic Growth, Energy Use, and Carbon Emissions by Co-Integration with Multiple Structural Breaks" Sustainability 14, no. 10: 6298. https://doi.org/10.3390/su14106298