Impact of bilateral trade on fossil energy consumption in BRICS: An extended decomposition analysis

Jiandong Chen, Qiaoli Xie, Muhammad Shahbaz, Malin Song and Li Li

Economic Modelling, 2022, vol. 106, issue C

Abstract: This paper analyzes the impact of bilateral trade among the BRICS countries on fossil energy consumption. Trade costs and economic scales on both sides have barely been considered in previous literature when bilateral trade impacts fossil energy. Using export data, energy-related data, and the GDP from the BRICS countries from 2000 to 2019, we analyze the characteristics of trade-related factors driving fossil energy. To combine exports with the GDP of both sides, we embed the gravity equation into an index decomposition equation and find that bilateral trade increases fossil energy consumption. Trade increased fossil energy consumption through growing transportation volumes during 2000–2008, and transportation energy efficiency improvements under technological advances reduced fossil energy consumption during 2014–2018. Another channel is that trade increased fossil energy consumption by promoting economic development.

Keywords: Logarithmic-mean divisia index (LMDI); Gravity model; BRICS; Fossil energy consumption; Bilateral trade (search for similar items in EconPapers)
JEL-codes: C51 F14 F15 O13 Q43 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:106:y:2022:i:c:s026499932100287x

DOI: 10.1016/j.econmod.2021.105698

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