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Asymmetry in the Environmental Pollution, Economic Development and Petrol Price Relationship: MRS-VAR and Nonlinear Causality Analyses

Author

Listed:
  • Özgür ERSIN

    (Beykent University, Faculty of Economics and Administrative Sciences, Department of Economics, Ayazaga-Sariyer, Istanbul, Turkey.)

  • Melike BILDIRICI

    (Yildiz Techical University, Faculty of Economics and Administrative Sciences, Department of Economics, Davutpasa, Istanbul, Turkey.)

Abstract

The paper aims at assessing the nonlinear relations among the carbon dioxide (CO2) emissions, petrol prices and the level of economic prosperity in USA and UK for the 18612012 and 1871-2012 periods. By covering one of the largest samples, the paper achieves its novelty through the utilization of the Markov-switching based VAR and Granger causality methodologies to provide important insights regarding the shape of the Environmental Kuznets Curve. The selection of UK and USA is not only based on the availability of the largest data, but also on selecting countries that have gone through the stages of economic development in the sense of Rostow. In addition, the impact of the petrol prices is introduced to the environment-income relation. With this respect, the paper achieves a link between the literature of the regime-switching based business cycles and the environmental economics. The empirical findings of the paper show that: (i) the asymmetric impacts of the economic growth rates on emissions cannot be rejected both for the expansionary and for the 2. The paper also discusses the need of caution due to the shift of production from the developed to the far east - creating a derived demand of world’s environmental degradation.

Suggested Citation

  • Özgür ERSIN & Melike BILDIRICI, 2019. "Asymmetry in the Environmental Pollution, Economic Development and Petrol Price Relationship: MRS-VAR and Nonlinear Causality Analyses," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 25-50, September.
    • Handle: RePEc:rjr:romjef:v::y:2019:i:3:p:25-50
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    Citations

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    Cited by:

    1. Cheng Yang & Jean Pierre Namahoro & Qiaosheng Wu & Hui Su, 2022. "Renewable and Non-Renewable Energy Consumption on Economic Growth: Evidence from Asymmetric Analysis across Countries Connected to Eastern Africa Power Pool," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    2. Shien Xiao & Langang Feng & Shu Shang, 2022. "The Environmental Effect of Industrial Transfer in the Beijing–Tianjin–Hebei Region," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    3. Mengjuan Zhang & Mingxing Li & Hongzheng Sun & Fredrick Oteng Agyeman & Hira Salah ud din Khan & Zedong Zhang, 2022. "Investigation of Nexus between Knowledge Learning and Enterprise Green Innovation Based on Meta-Analysis with a Focus on China," Energies, MDPI, vol. 15(4), pages 1-22, February.
    4. Haitao Hou & Wei Lu & Bing Liu & Zeina Hassanein & Hamid Mahmood & Samia Khalid, 2023. "Exploring the Role of Fossil Fuels and Renewable Energy in Determining Environmental Sustainability: Evidence from OECD Countries," Sustainability, MDPI, vol. 15(3), pages 1-13, January.

    More about this item

    Keywords

    Environment economics; environmental Kuznets curve; nonlinear causality; CO2 emissions; petrol prices;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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