Asymmetric impact of energy consumption & financial development on environment using ARDL approach: Case of ASEAN countries

Wang Hanning, Muhammad Safdar Sial, Li Shunyi,, Sarminah Samad and Ubaldo Comite

Energy, 2024, vol. 305, issue C

Abstract: Current research explores the adverse impact of energy consumption and economic development in the ASEAN region. The choice of the region stems from the fact that the human development index of the region ranges widely from 0.93 of Singapore to that of Myanmar, which is 0.58. besides that, the region's Ecological Footprint is increasing with time. Another aspect of the region stems from the fact that, on average, the region has had an ecological deficit since the 1970s. This research examines the origins of environmental degradation in South Asia by analyzing the lopsided impact of urbanization and economic expansion on economic growth and energy use. This study applies the non-linear autoregressive distributive lag (NARDL) method to examine the asymmetry that results from both the positive and negative disruptions of financial development and energy consumption, using an annual dataset spanning 1980 to 2021. According to the NARDL model's findings, both positive and negative shocks in energy consumption significantly contribute to increasing environmental degradation over the long run and decreasing the density of CO2 emissions in the short run. While several factors can cause short-term changes in CO2 emissions, only an adverse shift in financial development can have a lasting and major effect on global emissions. In addition, the ARDL model's findings suggest that less environmental deterioration occurs due to economic progress, but CO2 emissions increase due to rising energy consumption. This article argues that governments should try to achieve high economic success through energy consumption and economic growth that is less taxing on the environment.

Keywords: ARDL; NARDL; Energy consumption; CO2 emission; Financial development (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:305:y:2024:i:c:s0360544224020152

DOI: 10.1016/j.energy.2024.132241

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