Energy consumption, economic policy uncertainty and carbon emissions; causality evidence from resource rich economies

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Adams S., Adedoyin F., Olaniran E., Bekun F. V.

Economic Analysis and Policy, vol.68, pp.179-190, 2020 (SSCI, Scopus)

  • Publication Type: Article / Article
  • Volume: 68
  • Publication Date: 2020
  • Doi Number: 10.1016/j.eap.2020.09.012
  • Journal Name: Economic Analysis and Policy
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, IBZ Online, EconLit
  • Page Numbers: pp.179-190
  • Keywords: Carbon dioxide emissions, Economic growth, Economic policy uncertainty, Energy consumption, Geopolitical risk
  • Open Archive Collection: Article
  • Azerbaijan State University of Economics (UNEC) Affiliated: No

Abstract

© 2020 Economic Society of Australia, QueenslandThe study uses the World Uncertainty Index to analyze the long-run relationship of economic policy uncertainty and energy consumption for countries with high geopolitical risk over the period 1996–2017. The Kao test shows a cointegration association between energy consumption, economic growth, geopolitical risk, economic policy uncertainty, and carbon dioxide (CO2) emissions. The results based on the Panel Pooled Mean Group-Autoregressive Distributed lag model (PMG-ARDL) show that energy consumption and economic growth contribute to (CO2) emissions. Additionally, there is a significant association between economic uncertainty and CO2 emissions in the long-run. The panel causality analysis by Dumitrescu and Hurlin (2012) shows a bidirectional relationship between CO2 emissions and energy consumption, economic policy uncertainty and CO2 emissions, economic growth and CO2 emissions, but a unidirectional causality from CO2 emissions to geopolitical risks. The findings call for vital changes in energy policies to accommodate economic policy uncertainties and geopolitical risks.