Advanced Search
MyIDEAS: Login

Does financial instability increase environmental degradation? Fresh evidence from Pakistan

Contents:

Author Info

  • Shahbaz, Muhammad

Abstract

The present study explores the relationship between financial instability and environmental degradation within the multivariate framework using time series data over the period of 1971–2009 in case of Pakistan. The long run relationship is investigated by the ARDL bounds testing approach to cointegration, and error correction method (ECM) is applied to examine the short run dynamics. The stationary properties of the variables are investigated by applying Saikkonen and Lütkepohl unit root test. Empirical evidence confirms that there exists a long run relationship between both variables and financial instability increases environmental degradation.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0264999313001776
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 33 (2013)
Issue (Month): C ()
Pages: 537-544

as in new window
Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:537-544

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Financial instability; Environment; Cointegration;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  2. Dinda, Soumyananda & Coondoo, Dipankor, 2006. "Income and emission: A panel data-based cointegration analysis," Ecological Economics, Elsevier, vol. 57(2), pages 167-181, May.
  3. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate Of The Effect Of Common Currencies On Trade And Income," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 437-466, May.
  4. Gary Koop & Lise Tole, 2008. "What is the environmental performance of firms overseas? An empirical investigation of the global gold mining industry," Journal of Productivity Analysis, Springer, vol. 30(2), pages 129-143, October.
  5. Mark Heil & Thomas Selden, 1999. "Panel stationarity with structural breaks: carbon emissions and GDP," Applied Economics Letters, Taylor & Francis Journals, vol. 6(4), pages 223-225.
  6. Chang, Ching-Chih, 2010. "A multivariate causality test of carbon dioxide emissions, energy consumption and economic growth in China," Applied Energy, Elsevier, vol. 87(11), pages 3533-3537, November.
  7. Shahbaz, Muhammad & Mutascu, Mihai & Azim, Parvez, 2013. "Environmental Kuznets curve in Romania and the role of energy consumption," Renewable and Sustainable Energy Reviews, Elsevier, vol. 18(C), pages 165-173.
  8. Norman Loayza & Romain Ranciere, 2005. "Financial Development, Financial Fragility, and Growth," IMF Working Papers 05/170, International Monetary Fund.
  9. Nasir, Muhammad & Ur Rehman, Faiz, 2011. "Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation," Energy Policy, Elsevier, vol. 39(3), pages 1857-1864, March.
  10. Ozturk, Ilhan & Acaravci, Ali, 2013. "The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey," Energy Economics, Elsevier, vol. 36(C), pages 262-267.
  11. Islam, Faridul & Shahbaz, Muhammad & Ahmed, Ashraf U. & Alam, Md. Mahmudul, 2013. "Financial development and energy consumption nexus in Malaysia: A multivariate time series analysis," Economic Modelling, Elsevier, vol. 30(C), pages 435-441.
  12. Suri, Vivek & Chapman, Duane, 1998. "Economic growth, trade and energy: implications for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 25(2), pages 195-208, May.
  13. repec:hal:journl:halshs-00637961 is not listed on IDEAS
  14. David I. Stern, 2003. "The Rise and Fall of the Environmental Kuznets Curve," Rensselaer Working Papers in Economics 0302, Rensselaer Polytechnic Institute, Department of Economics.
  15. Tamazian, Artur & Rao, B. Bhaskara, 2008. "Do Economic, Financial and Institutional Developments Matter for Environmental Degradation? Evidence from Transitional Economies," MPRA Paper 13015, University Library of Munich, Germany.
  16. Lean, Hooi Hooi & Smyth, Russell, 2010. "CO2 emissions, electricity consumption and output in ASEAN," Applied Energy, Elsevier, vol. 87(6), pages 1858-1864, June.
  17. Shahbaz, Muhammad & Lean, Hooi Hooi, 2012. "Does financial development increase energy consumption? The role of industrialization and urbanization in Tunisia," Energy Policy, Elsevier, vol. 40(C), pages 473-479.
  18. Robert D. Klassen & Curtis P. McLaughlin, 1996. "The Impact of Environmental Management on Firm Performance," Management Science, INFORMS, vol. 42(8), pages 1199-1214, August.
  19. Friedl, Birgit & Getzner, Michael, 2003. "Determinants of CO2 emissions in a small open economy," Ecological Economics, Elsevier, vol. 45(1), pages 133-148, April.
  20. repec:fth:wobaco:1083 is not listed on IDEAS
  21. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  22. Shahbaz, Muhammad & Lean, Hooi Hooi & Shabbir, Muhammad Shahbaz, 2012. "Environmental Kuznets Curve hypothesis in Pakistan: Cointegration and Granger causality," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 2947-2953.
  23. Ang, James B., 2007. "CO2 emissions, energy consumption, and output in France," Energy Policy, Elsevier, vol. 35(10), pages 4772-4778, October.
  24. Serena Ng & Pierre Perron, 1997. "Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power," Boston College Working Papers in Economics 369, Boston College Department of Economics, revised 01 Sep 2000.
  25. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
  26. Halicioglu, Ferda, 2008. "An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey," MPRA Paper 11457, University Library of Munich, Germany.
  27. Kuheli Dutt, 2009. "Governance, institutions and the environment-income relationship: a cross-country study," Environment, Development and Sustainability, Springer, vol. 11(4), pages 705-723, August.
  28. Saikkonen, Pentti & L tkepohl, Helmut, 2002. "Testing For A Unit Root In A Time Series With A Level Shift At Unknown Time," Econometric Theory, Cambridge University Press, vol. 18(02), pages 313-348, April.
  29. Wyckoff, Andrew W. & Roop, Joseph M., 1994. "The embodiment of carbon in imports of manufactured products : Implications for international agreements on greenhouse gas emissions," Energy Policy, Elsevier, vol. 22(3), pages 187-194, March.
  30. Jalil, Abdul & Feridun, Mete, 2011. "The impact of growth, energy and financial development on the environment in China: A cointegration analysis," Energy Economics, Elsevier, vol. 33(2), pages 284-291, March.
  31. Gupta, Shreekant & Goldar, Bishwanath, 2005. "Do stock markets penalize environment-unfriendly behaviour? Evidence from India," Ecological Economics, Elsevier, vol. 52(1), pages 81-95, January.
  32. Patrick Richard, 2010. "Financial market instability and CO2 emissions," Cahiers de recherche 10-20, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  33. Hansen, Bruce E, 1992. "Tests for Parameter Instability in Regressions with I(1) Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 321-35, July.
  34. Sadorsky, Perry, 2010. "The impact of financial development on energy consumption in emerging economies," Energy Policy, Elsevier, vol. 38(5), pages 2528-2535, May.
  35. Dasgupta, Susmita & Hong, Jong Ho & Laplante, Benoit & Mamingi, Nlandu, 2006. "Disclosure of environmental violations and stock market in the Republic of Korea," Ecological Economics, Elsevier, vol. 58(4), pages 759-777, July.
  36. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
  37. Saboori, Behnaz & Sulaiman, Jamalludin & Mohd, Saidatulakmal, 2012. "Economic growth and CO2 emissions in Malaysia: A cointegration analysis of the Environmental Kuznets Curve," Energy Policy, Elsevier, vol. 51(C), pages 184-191.
  38. Fodha, Mouez & Zaghdoud, Oussama, 2010. "Economic growth and pollutant emissions in Tunisia: An empirical analysis of the environmental Kuznets curve," Energy Policy, Elsevier, vol. 38(2), pages 1150-1156, February.
  39. Coondoo, Dipankor & Dinda, Soumyananda, 2008. "Carbon dioxide emission and income: A temporal analysis of cross-country distributional patterns," Ecological Economics, Elsevier, vol. 65(2), pages 375-385, April.
  40. Jalil, Abdul & Mahmud, Syed F., 2009. "Environment Kuznets curve for CO2 emissions: A cointegration analysis for China," Energy Policy, Elsevier, vol. 37(12), pages 5167-5172, December.
  41. Hamilton, Clive & Turton, Hal, 2002. "Determinants of emissions growth in OECD countries," Energy Policy, Elsevier, vol. 30(1), pages 63-71, January.
  42. Kimitaka Nishitani, 2011. "An Empirical Analysis of the Effects on Firms’ Economic Performance of Implementing Environmental Management Systems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(4), pages 569-586, April.
  43. Scruggs, Lyle A., 1998. "Political and economic inequality and the environment," Ecological Economics, Elsevier, vol. 26(3), pages 259-275, September.
  44. Tiwari, Aviral Kumar & Muhammad, Shahbaz, 2012. "The environmental Kuzents Curve and the role of coal consumption in India: cointegration and causality analysis in an open economy," MPRA Paper 37775, University Library of Munich, Germany, revised 31 Mar 2012.
  45. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  46. Declercq, Bruno & Delarue, Erik & D'haeseleer, William, 2011. "Impact of the economic recession on the European power sector's CO2 emissions," Energy Policy, Elsevier, vol. 39(3), pages 1677-1686, March.
  47. Alam, Shaista & Fatima, Ambreen & Butt, Muhammad S., 2007. "Sustainable development in Pakistan in the context of energy consumption demand and environmental degradation," Journal of Asian Economics, Elsevier, vol. 18(5), pages 825-837, October.
  48. Sadorsky, Perry, 2011. "Financial development and energy consumption in Central and Eastern European frontier economies," Energy Policy, Elsevier, vol. 39(2), pages 999-1006, February.
  49. Muhammad Shahbaz & S M Aamir Shamim & Naveed Aamir, 2010. "Macroeconomic Environment and Financial Sector’s Performance: Econometric Evidence from Three Traditional Approaches," The IUP Journal of Financial Economics, IUP Publications, vol. 0(1 & 2), pages 103-123, March & J.
  50. Say, Nuriye Peker & Yucel, Muzaffer, 2006. "Energy consumption and CO2 emissions in Turkey: Empirical analysis and future projection based on an economic growth," Energy Policy, Elsevier, vol. 34(18), pages 3870-3876, December.
  51. Tamazian, Artur & Chousa, Juan Piñeiro & Vadlamannati, Krishna Chaitanya, 2009. "Does higher economic and financial development lead to environmental degradation: Evidence from BRIC countries," Energy Policy, Elsevier, vol. 37(1), pages 246-253, January.
  52. Anton Nahman & Geoff Antrobus, 2005. "Trade And The Environmental Kuznets Curve: Is Southern Africa A Pollution Haven?," South African Journal of Economics, Economic Society of South Africa, vol. 73(4), pages 803-814, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Farhani, Sahbi & Chaibi, Anissa & Rault, Christophe, 2014. "CO2 emissions, output, energy consumption, and trade in Tunisia," Economic Modelling, Elsevier, vol. 38(C), pages 426-434.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:537-544. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.