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

Samuel Adams, Festus Adedoyin, Eniola Olaniran and Festus Bekun

Economic Analysis and Policy, 2020, vol. 68, issue C, 179-190

Abstract: The 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.

Keywords: Energy consumption; Carbon dioxide emissions; Geopolitical risk; Economic growth; Economic policy uncertainty (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (94)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:68:y:2020:i:c:p:179-190

DOI: 10.1016/j.eap.2020.09.012

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