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The Effect of Urbanization, Affluence and Trade Openness on Energy Consumption: A Time Series Analysis in Malaysia

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  • Shahbaz, Muhammad
  • Sbia, Rashid
  • Nanthakumar, Loganathan
  • Afza, Talat

Abstract

This paper investigates the impact of urbanization on energy consumption by applying the Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT) in case of Malaysia. The study covers the time period of 1970Q1-2011Q4. The unit root test and the ARDL bounds testing approach have been applied to examine integrating properties and long run relationship in the presence of structural breaks. Our results validated the existence of cointegration and exposed that urbanization is a major contributor in energy consumption. Affluence raises energy demand. Capital stock boosts energy consumption. Trade openness leads affluence and hence increases energy consumption. The causality analysis finds that urbanization Granger causes energy consumption. The feedback effect is found between energy consumption and affluence and, energy consumption and capital. The bidirectional causality exists between trade openness and energy consumption.

Suggested Citation

  • Shahbaz, Muhammad & Sbia, Rashid & Nanthakumar, Loganathan & Afza, Talat, 2015. "The Effect of Urbanization, Affluence and Trade Openness on Energy Consumption: A Time Series Analysis in Malaysia," MPRA Paper 62743, University Library of Munich, Germany, revised 11 Mar 2015.
  • Handle: RePEc:pra:mprapa:62743
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    Cited by:

    1. Shahbaz, Muhammad & Loganathan, Nanthakumar & Muzaffar, Ahmed Taneem & Ahmed, Khalid & Ali Jabran, Muhammad, 2016. "How urbanization affects CO2 emissions in Malaysia? The application of STIRPAT model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 83-93.
    2. repec:eee:rensus:v:81:y:2018:i:p2:p:2144-2159 is not listed on IDEAS
    3. Shahbaz, Muhammad & Shahzad, Syed Jawad Hussain & Alam, Shaista & Apergis, Nicholas, 2018. "Globalisation, Economic Growth and Energy Consumption in the BRICS Region: The Importance of Asymmetries," MPRA Paper 86979, University Library of Munich, Germany, revised 16 May 2018.
    4. repec:eee:energy:v:133:y:2017:i:c:p:242-256 is not listed on IDEAS
    5. Li, Ke & Lin, Boqiang, 2015. "Impacts of urbanization and industrialization on energy consumption/CO2 emissions: Does the level of development matter?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1107-1122.
    6. Shahbaz, Muhammad & Chaudhary, A.R. & Ozturk, Ilhan, 2017. "Does urbanization cause increasing energy demand in Pakistan? Empirical evidence from STIRPAT model," Energy, Elsevier, vol. 122(C), pages 83-93.
    7. repec:eee:rensus:v:81:y:2018:i:p2:p:2421-2430 is not listed on IDEAS
    8. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.
    9. Li, Lei & Chi, Ting & Wang, Shi, 2016. "Is energy utilization among Chinese provinces sustainable?," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 198-206.
    10. Wang, Qiang & Wu, Shi-dai & Zeng, Yue-e & Wu, Bo-wei, 2016. "Exploring the relationship between urbanization, energy consumption, and CO2 emissions in different provinces of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 1563-1579.
    11. repec:eee:rensus:v:82:y:2018:i:p3:p:2147-2161 is not listed on IDEAS
    12. Behera, Smruti Ranjan & Dash, Devi Prasad, 2017. "The effect of urbanization, energy consumption, and foreign direct investment on the carbon dioxide emission in the SSEA (South and Southeast Asian) region," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 96-106.
    13. Iwata, Kazuyuki & Managi, Shunsuke, 2015. "Can Land Use Regulations and Taxes Help Mitigate Vehicular CO2 emissions?: An Empirical Study of Japanese Cities," MPRA Paper 66435, University Library of Munich, Germany.
    14. repec:wsi:serxxx:v:62:y:2017:i:02:n:s0217590815501167 is not listed on IDEAS

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    Keywords

    Urbanization; Energy; Malaysia;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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