IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2024-02-36.html
   My bibliography  Save this article

Exploring the Nexus between CO2 Emissions, Trade, and Sustainable Economic Growth: A Novel NARDL Approach

Author

Listed:
  • Muhammad Mohsin

    (Putra Business School, 43400 UPM Serdang, Selangor, Malaysia)

  • Mad Nasir Shamsudin

    (Putra Business School, 43400 UPM Serdang, Selangor, Malaysia)

  • Khalid Mahsan Alshammary

    (School of Distance Education, Universiti Sains Malaysia,)

  • Muddassar Sarfraz

    (School of Management, Zhejiang Shuren University, Hangzhou, China)

Abstract

This study investigates the nexus between CO2 emission, trade, GDP, and tourism in Pakistan during 1990-2019. We examined the asymmetric relationship between CO2 emission, international trade, GDP, and international tourism number of arrivals in Pakistan. Data Stationarity has been tested using the Augmented Dicky Fuller (ADF), Kwiatkowski-Phillips-Schmidt-Shin (KPSS), and Phillips-Perron (PP) tests for unit roots. We used the NARDL technique and Granger Causality to estimate the relationship between these environmental variables. The ARDL technique can potentially explore the dynamic nexus between CO2 emission, tourism, GDP, and trade. Our findings suggest a dynamic relationship between tourism, trade, CO2 emission, and GDP from Pakistan’s perspective. The outcomes reveal that negative and positive shocks to trade, GDP, and tourism affect CO2emissions in the short and long term. The Granger Causality findings also determined that causality is directed from Tourism toward CO2 emission, while unidirectional causality was found between CO2 emission and tourism. In this study, the graphs of the CUSUM and CUSUMQ determined the functional stability of the established relationship. This indicates that this model is a suitable and valuable strategy tool. The finding benefits macro-level policymakers and will provide important insight for the relevant stakeholders.

Suggested Citation

  • Muhammad Mohsin & Mad Nasir Shamsudin & Khalid Mahsan Alshammary & Muddassar Sarfraz, 2024. "Exploring the Nexus between CO2 Emissions, Trade, and Sustainable Economic Growth: A Novel NARDL Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 357-366, March.
    • Handle: RePEc:eco:journ2:2024-02-36
    as

    Download full text from publisher

    File URL: https://econjournals.com/index.php/ijeep/article/download/15020/7774/36360
    Download Restriction: no
    File URL: https://econjournals.com/index.php/ijeep/article/view/15020/7774
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhenkai Yang & Mei-Chih Wang & Tsangyao Chang & Wing-Keung Wong & Fangjhy Li, 2022. "Which Factors Determine CO 2 Emissions in China? Trade Openness, Financial Development, Coal Consumption, Economic Growth or Urbanization: Quantile Granger Causality Test," Energies, MDPI, vol. 15(7), pages 1-18, March.
    2. 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.
    3. Lee, Jung Wan & Brahmasrene, Tantatape, 2013. "Investigating the influence of tourism on economic growth and carbon emissions: Evidence from panel analysis of the European Union," Tourism Management, Elsevier, vol. 38(C), pages 69-76.
    4. Al-mulali, Usama & Binti Che Sab, Che Normee, 2012. "The impact of energy consumption and CO2 emission on the economic and financial development in 19 selected countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4365-4369.
    5. Tamazian, Artur & Bhaskara Rao, B., 2010. "Do economic, financial and institutional developments matter for environmental degradation? Evidence from transitional economies," Energy Economics, Elsevier, vol. 32(1), pages 137-145, January.
    6. Al-mulali, Usama & Binti Che Sab, Che Normee, 2012. "The impact of energy consumption and CO2 emission on the economic growth and financial development in the Sub Saharan African countries," Energy, Elsevier, vol. 39(1), pages 180-186.
    7. Hwang, JaeHee & Lee, SeongWoo, 2015. "The effect of the rural tourism policy on non-farm income in South Korea," Tourism Management, Elsevier, vol. 46(C), pages 501-513.
    8. Bahmani-Oskooee, Mohsen & Bohl, Martin T., 2000. "German monetary unification and the stability of the German M3 money demand function," Economics Letters, Elsevier, vol. 66(2), pages 203-208, February.
    9. 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.
    10. repec:ipg:wpaper:201415 is not listed on IDEAS
    11. Jeyhun I. Mikayilov & Marzio Galeotti & Fakhri J. Hasanov, 2018. "The Impact of Economic Growth on CO2 Emissions in Azerbaijan," IEFE Working Papers 102, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    12. Tang, Chengcai & Zhong, Linsheng & Ng, Pin, 2017. "Factors that Influence the Tourism Industry's Carbon Emissions: a Tourism Area Life Cycle Model Perspective," Energy Policy, Elsevier, vol. 109(C), pages 704-718.
    13. Arouri, Mohamed El Hedi & Ben Youssef, Adel & M'henni, Hatem & Rault, Christophe, 2012. "Energy consumption, economic growth and CO2 emissions in Middle East and North African countries," Energy Policy, Elsevier, vol. 45(C), pages 342-349.
    14. repec:ipg:wpaper:2014-582 is not listed on IDEAS
    15. Abdur Rehman Cheema, 2015. "High-rise buildings worsened heatwave," Nature, Nature, vol. 524(7563), pages 35-35, August.
    16. Larisa Ivascu & Muddassar Sarfraz & Muhammad Mohsin & Sobia Naseem & Ilknur Ozturk, 2021. "The Causes of Occupational Accidents and Injuries in Romanian Firms: An Application of the Johansen Cointegration and Granger Causality Test," IJERPH, MDPI, vol. 18(14), pages 1-17, July.
    17. Nikolaos Dritsakis, 2004. "Tourism as a Long-Run Economic Growth Factor: An Empirical Investigation for Greece Using Causality Analysis," Tourism Economics, , vol. 10(3), pages 305-316, September.
    18. Cole, Matthew A. & Elliott, Robert J. R., 2003. "Determining the trade-environment composition effect: the role of capital, labor and environmental regulations," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 363-383, November.
    19. Juan Luis Eugenio-Martín & Noelia Martín Morales & Riccardo Scarpa, 2004. "Tourism and Economic Growth in Latin American Countries: A Panel Data Approach," Working Papers 2004.26, Fondazione Eni Enrico Mattei.
    20. repec:ipg:wpaper:2014-056 is not listed on IDEAS
    21. Apergis, Nicholas & Payne, James E. & Menyah, Kojo & Wolde-Rufael, Yemane, 2010. "On the causal dynamics between emissions, nuclear energy, renewable energy, and economic growth," Ecological Economics, Elsevier, vol. 69(11), pages 2255-2260, September.
    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


    Cited by:

    1. Hanning, Wang & Sial, Muhammad Safdar & Li Shunyi, & Samad, Sarminah & Comite, Ubaldo, 2024. "Asymmetric impact of energy consumption & financial development on environment using ARDL approach: Case of ASEAN countries," Energy, Elsevier, vol. 305(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alam Rehman & Amir Ishaque & Shumaila Malik & Shams Ur Rehman & Arif Hussain & Muhammad Khan & Muhammad Zeeshan & Fakhr E. Alam Afridi, 2021. "Exploring Asymmetric Nexus Between Tourism, Economic Growth and CO2 Emissions in the Context of Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 338-345.
    2. Jamiu Adetola Odugbesan & Husam Rjoub, 2020. "Relationship Among Economic Growth, Energy Consumption, CO2 Emission, and Urbanization: Evidence From MINT Countries," SAGE Open, , vol. 10(2), pages 21582440209, April.
    3. Nasreen, Samia & Anwar, Sofia & Ozturk, Ilhan, 2017. "Financial stability, energy consumption and environmental quality: Evidence from South Asian economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 1105-1122.
    4. Xiaoxia Shi & Haiyun Liu & Joshua Sunday Riti, 2019. "The role of energy mix and financial development in greenhouse gas (GHG) emissions’ reduction: evidence from ten leading CO2 emitting countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 695-729, October.
    5. Shahzad, Syed Jawad Hussain & Kumar, Ronald Ravinesh & Zakaria, Muhammad & Hurr, Maryam, 2017. "Carbon emission, energy consumption, trade openness and financial development in Pakistan: A revisit," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 185-192.
    6. Khan, Muhammad Tariq Iqbal & Yaseen, Muhammad Rizwan & Ali, Qamar, 2019. "Nexus between financial development, tourism, renewable energy, and greenhouse gas emission in high-income countries: A continent-wise analysis," Energy Economics, Elsevier, vol. 83(C), pages 293-310.
    7. Rafindadi, Abdulkadir Abdulrashid, 2016. "Does the need for economic growth influence energy consumption and CO2 emissions in Nigeria? Evidence from the innovation accounting test," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 1209-1225.
    8. Mumin Atalay Cetin & Ibrahim Bakirtas, 2020. "The long-run environmental impacts of economic growth, financial development, and energy consumption: Evidence from emerging markets," Energy & Environment, , vol. 31(4), pages 634-655, June.
    9. Irwan Shah Zainal Abidin & Muhammad Haseeb & Muhammad Azam & Rabiul Islam, 2015. "Foreign Direct Investment, Financial Development, International Trade and Energy Consumption: Panel Data Evidence from Selected ASEAN Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 5(3), pages 841-850.
    10. Ahmed Nahar Al-Hussaini, 2019. "The Role of Financial Management in Testing Environmental Kuznets Curve in Kuwait: Evidence from ARDL Bound Testing Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 353-359.
    11. Charfeddine, Lanouar & Ben Khediri, Karim, 2016. "Financial development and environmental quality in UAE: Cointegration with structural breaks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 1322-1335.
    12. Wang, Shaojian & Li, Guangdong & Fang, Chuanglin, 2018. "Urbanization, economic growth, energy consumption, and CO2 emissions: Empirical evidence from countries with different income levels," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2144-2159.
    13. Amjad Ali & Marc Audi & Yannick Roussel, 2021. "Natural Resources Depletion, Renewable Energy Consumption and Environmental Degradation: A Comparative Analysis of Developed and Developing World," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 251-260.
    14. Iftikhar Yasin & Nawaz Ahmad & M. Aslam Chaudhary, 2020. "Catechizing the Environmental-Impression of Urbanization, Financial Development, and Political Institutions: A Circumstance of Ecological Footprints in 110 Developed and Less-Developed Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(2), pages 621-649, January.
    15. Al-mulali, Usama & Tang, Chor Foon & Ozturk, Ilhan, 2015. "Estimating the Environment Kuznets Curve hypothesis: Evidence from Latin America and the Caribbean countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 918-924.
    16. Edmund Ntom Udemba & Mohammad Mafizur Rahman & Daberechi Ekwueme & Lucy Philips, 2024. "Pathway to achieving carbon goal: Insight from interaction of export diversification, renewable energy, innovation, and financial policy," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 11603-11621, May.
    17. Raza, Syed Ali & Shah, Nida, 2018. "Impact of Financial Development, Economic Growth and Energy Consumption On Environmental Degradation: Evidence from Pakistan," MPRA Paper 87095, University Library of Munich, Germany.
    18. Sudipa Majumdar & Cody Morris Paris, 2022. "Environmental Impact of Urbanization, Bank Credits, and Energy Use in the UAE—A Tourism-Induced EKC Model," Sustainability, MDPI, vol. 14(13), pages 1-14, June.
    19. Abdul Rahim Ridzuan & Aliashim Albani & Abdul Rais Abdul Latiff & Mohamad Idham Md Razak & Mohd Haziq Murshidi, 2020. "The Impact of Energy Consumption based on Fossil Fuel and Hydroelectricity Generation towards Pollution in Malaysia, Indonesia and Thailand," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 215-227.
    20. Dogan, Eyup & Seker, Fahri, 2016. "Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy," Renewable Energy, Elsevier, vol. 94(C), pages 429-439.

    More about this item

    Keywords

    CO2 Emission; International Tourism Number of Arrival; Gross Domestic Product; Trade; Non-Linear Autoregressive Distributed Lags; Pakistan;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2024-02-36. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.