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Nexus between Energy Consumption, Foreign Direct Investment, Oil Prices, Economic Growth, and Carbon Emissions in Italy: Fresh Evidence from Autoregressive Distributed Lag and Wavelet Coherence Approach

Author

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  • Aamir Javed

    (Department of Management and Business Administration, “G. D’Annunzio” University of Chieti-Pescara, 65127 Pescara, Italy)

  • Agnese Rapposelli

    (Department of Economic Studies, “G. D’Annunzio” University of Chieti-Pescara, 65127 Pescara, Italy)

  • Mohsin Shah

    (International Institute of Islamic Economics, International Islamic University, Islamabad 44000, Pakistan)

  • Asif Javed

    (Department of Advanced Technologies in Medicine and Dentistry, “G. D’Annunzio” University of Chieti-Pescara, 66100 Chieti, Italy)

Abstract

The aim of this study is to explore the impact of economic growth (GDP), energy consumption, foreign direct investment, oil price, and exports on carbon emissions by employing yearly time series data for Italy for the period 1971–2019. For this purpose, we employed the autoregressive distributed lag (ARDL) model and wavelet coherence approach to analyze the interconnections among variables. The cointegration results confirm the long-run association between our variables. Our findings show that GDP has a positive impact on carbon emissions, while the square of GDP has a negative impact, thus confirming the presence of the EKC hypothesis. Further, oil prices have a detrimental impact on carbon emissions both in the long- and short-term; on the contrary, foreign direct investment, energy consumption, and exports promote environmental degradation. We propose some important policy recommendations based on these findings to address the environmental constraints.

Suggested Citation

  • Aamir Javed & Agnese Rapposelli & Mohsin Shah & Asif Javed, 2023. "Nexus between Energy Consumption, Foreign Direct Investment, Oil Prices, Economic Growth, and Carbon Emissions in Italy: Fresh Evidence from Autoregressive Distributed Lag and Wavelet Coherence Approa," Energies, MDPI, vol. 16(16), pages 1-23, August.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:16:p:5885-:d:1213527
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