Carbon emission, energy consumption, trade openness and financial development in Pakistan: A revisit

By Syed Jawad Hussain Shahzad, R. Kumar, Muhammad Zakaria, Maryam Hurr. 2017

433 citations recorded by the source corpus.

The paper empirically examines the cointegrating relationship between carbon emissions, energy consumption, trade openness and financial development in Pakistan using ARDL bounds test for cointegration procedure. Annual time series data is used for the period 1971–2011. The results reveal an inverted U-shaped relationship between carbon emission and energy consumption with a maximum threshold value of energy consumption per capita 640 kg of oil equivalent. Currently, the economy is operating below this level and therefore it is expected that carbon emission will continue to rise gradually over some time until the threshold level is reached. The lower than threshold level of energy consumption implies that scale and composition effects dominate the technology effect in terms of energy use. Further, the long-run results indicate that one percent increase in trade openness and financial development will increase carbon emission by 0.247% and 0.165%, respectively. The short-run elasticities are 0.122% and 0.087% for trade openness and financial development, respectively. The Granger causality results indicate a unidirectional causality from energy consumption, trade openness and financial development to carbon emission; and a bi-directional causality between energy consumption and financial development. In line with the results and given the growing focus on climate change effects in Pakistan, the paper discusses some policy issues for consideration and highlights the need to interpret elasticities with caution.

Subfields: Economics and Econometrics, Pollution, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/d12c6312a29981f91b1bff6bcd295bbea8872699

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Citations in the corpus

Does renewable energy consumption reduce ecological footprint? Evidence from eight developing countries of Asia (2020, background): “The literature is filled with studies where instead of segregation of energy into renewable and nonrenewable, the overall impact of energy consumption on carbon emissions has been examined (Shahzad et al., 2017; Afridi et al., 2019).”
Trade openness, urbanization and CO2 emissions: Dynamic panel data analysis of middle-income countries (2018, background): “However, others argue that trade openness is harmful for environment by adopting composite effect for production (Shahbaz, Tiwari, and Nasir 2013; Shahzad et al. 2017).”
Analyzing nonlinear impact of economic growth drivers on CO2 emissions: Designing an SDG framework for India (2020, result): “While studies by Wang et al. (2017) and Shahbaz et al.”
The role of education in the Environmental Kuznets Curve. Evidence from Australian data (2018, result): “The positive association between trade openness and CO2 emissions is in line with other studies (e.g., Managi, 2004; Bombardini and Li, 2016; Shahzad et al., 2017).”
Investigating the asymmetric linkages between infrastructure development, green innovation, and consumption-based material footprint: Novel empirical estimations from highly resource-consuming economies (2021, background): “113 A large extent of literature has concentrated on factors that agonies global resources such as 114 population, industrial growth, energy consumption, trade, globalization, and urbanization (Khan et al., 115 2020; Mi et al., 2015; Shahzad et al., 2017; Shen et al., 2018; Yao et al., 2015).”
An (a)symmetric analysis of the pollution haven hypothesis in the context of Pakistan: a non-linear approach (2019, background): “Further, connections among trade openness, urbanization, energy, financial development and population growth under the EKC hypothesis have been studied by many researchers; such studies include [23] in the case of China; [24] for Canada; [25] in the case of Malaysia; [26] in the case of Indonesia; [”