Over recent years, renewable energy sources have emerged as an important component of world energy consumption. Little is however known about the determinants of renewable energy consumption. This ...article tackles this issue for a global panel consisting of 64 countries over the period 1990–2011 by using a dynamic system-GMM panel model. We also consider three homogenous subpanels which are constructed based on the income level of sample countries (high-, middle-, and low-income subpanels). We mainly find that the increases in CO2 emissions and trade openness are the major drivers of renewable energy consumption. Oil price increases have a smaller but negative impact on renewable energy consumption in the middle-income and global panels. Policy implications of our results are also discussed.
•We examine the determinants of renewable energy consumption.•We use a dynamic panel model for a panel of 64 countries over the period 1990–2011.•We also consider three subpanels which are constructed based on the income level.•We find that CO2 emissions and trade openness are the major drivers of renewable energy.
The environment that governs the relationships between energy consumption, carbon dioxide (CO2) emissions and gross domestic product (GDP) in the G7 countries changes over time due to variations in ...economic growth, regulatory policy and technology. Using a novel approach that may detect causalities when the time-constant hypothesis is rejected, we find significant time-varying Granger causalities among the variables under consideration. There is bidirectional causality between GDP and energy consumption for Japan, unidirectional causality running from GDP to energy consumption for Italy, and unidirectional causality running from energy consumption to GDP for the resource country Canada. Moreover, the results also show a bidirectional time-varying causality between energy consumption and CO2 emissions for the United States, and causality from energy consumption to CO2 emissions for France. Finally, while we find significant time-varying causalities running from GDP to CO2 emissions for Italy and Japan, the finding of inverted N-shaped curves (Italy and Japan) lends no support to the traditional Environmental Kuznets Curve (EKC) hypothesis for these countries. It implies that environmental policy and economic growth should go hand in hand. Other policy implications of the empirical results have been proposed.
•The links between energy consumption, CO2 emissions and GDP are examined.•We use a novel approach to detect time-varying (TV) causalities.•Data for the G7 countries excluding Germany are considered.•We find some evidence of bidirectional TV causality between variables of interest.•The inverted N-causality curves lend no support to the traditional EKC hypothesis.
We examine the explanatory and forecasting power of economic growth, financial development, trade openness and FDI for CO2 emissions in major developed economies within the context of the debate on ...curbing CO2 emissions Post-Paris Agreement (COP21). Using data from G-6 countries from 1978 to 2014 and employing a set of empirical approaches, we find weak evidence of the Environmental Kuznets Curve, while economic growth, capital market expansion, and trade openness are found to be major drivers of carbon emissions. Carbon emissions are also weakly and negatively affected by stock market capitalization and FDI. Moreover, the forecasting performance is quite good, particularly by augmenting the model with energy consumption and oil prices. With respect to climate commitments, our empirical findings reveal important policy implications.
•Forecasting power of economic and financial drivers of CO2 emissions is examined.•We find weak evidence of the Environmental Kuznets Curve for the G6 countries.•CO2 emissions are driven by growth, market expansion, and trade openness.•Stock market capitalization and FDI also contribute to CO2 emissions.•Forecasting performance is improved with energy consumption and oil prices.
•We explore the links among US equity and commodity markets via complex network theory.•We reveal the temporal dimension of correlation using time-varying network topologies.•Via simulation analysis ...we assess the impact of denoising on data dependence structure.•The disparity of entropy centrality measurements is shown between pre- and post-crisis.•The results enable robust mapping of contagion effects incorporating agent expectations.
This paper investigates the dynamic causal linkages among U.S. equity and commodity futures markets via the utilization of complex network theory. We make use of rolling estimations of extended matrices and time-varying network topologies to reveal the temporal dimension of correlation and entropy relationships. A simulation analysis using randomized time series is also implemented to assess the impact of de-noising on the data dependence structure. We mainly show evidence of emphasized disparity of correlation and entropy-based centrality measurements for all markets between pre- and post-crisis periods. Our results enable the robust mapping of network influences and contagion effects while incorporating agent expectations.
This study investigates the energy–growth–trade nexus in Pakistan by using the annual time series data for the period of 1973–2013. Our main results show: (i) the presence of long-run link between ...energy consumption and trade performance; (ii) positive impact of gross domestic product, exports, and imports on energy consumption; (iii) bidirectional causal relationship between exports and energy consumption, and also between imports and energy demand; and (iv) bidirectional causality between gross domestic product and energy consumption points to the presence of feedback hypothesis in Pakistan. We therefore note that energy conservation policies will reduce the trade performance which in turn leads to decline in economic growth in Pakistan. The present study may guide policymakers in formulating a conclusive energy and trade policies for sustainable growth for long span of time.
•This study investigates the energy–growth–trade nexus in Pakistan.•Results indicate a long-run link between energy consumption (EC) and trade.•EC is positively affected by GDP, exports, and imports.•We find significant bilateral causal linkages among the studied variables.•Energy conservation policies thus lead to reduce the trade performance and growth.
•We examine the impact of green credit policy on corporate total factor productivity.•Green credit policy improves total factor productivity of heavily polluting firms.•Technology innovation and ...resource allocation efficiency are the channels.•Firm characteristics, external monitoring, and regional differences shape the link.
Taking the implementation of the “Green Credit Guidelines” in China in 2012 as an exogenous shock, we adopt the difference-in-differences (DIDs) method to explore the influence of the green credit policy on total factor productivity (TFP). We show evidence of a significant and positive correlation between green credit and corporate total factor productivity, and this result is robust to a series of robustness tests. In addition, the improvement is particularly evident for non-SOEs, small-scale firms, firms with weak external supervision, and firms in developed areas of eastern China. Moreover, the green credit policy mainly affects corporate total factor productivity through promoting technological innovation and enhancing resource allocation efficiency. Overall, green credit promotes the win-win development of the environment and the economy.
We use a quantile regression framework to investigate the impact of changes in crude oil prices, natural gas prices, coal prices, and electricity prices on the distribution of the CO2 emission ...allowance prices in the United States. We find that: (i) an increase in the crude oil price generates a substantial drop in the carbon prices when the latter is very high; (ii) changes in the natural gas prices have a negative effect on the carbon prices when they are very low but have a positive effect when they are quite high; (iii) the impact of the changes in the electricity prices on the carbon prices can be positive in the right tail of the distribution; and (iv) the coal prices exert a negative effect on the carbon prices.
•We study the impact of energy prices on CO2 allowance prices in the United States.•Quantile regressions are used to conduct the empirical analysis.•Energy prices have generally different impacts on the CO2 prices.•These impacts also depend on whether CO2 prices are at the low or the high quantiles.•Policy implications are discussed.
We employ the time-varying copula approach to investigate the conditional dependence between the Brent crude oil price and stock markets in the Central and Eastern European (CEE) transition ...economies. Our results show evidence of a positive dependence between the oil and the stock markets of the six CEE countries, which is indicative of a contagion between those markets, regardless of the changes in the oil price or the CEE stock index. Moreover, the dependence patterns in both the center and left tails of the return distributions change over time, particularly during the heart of the financial crisis, and are best described by the Survival Gumbel copulas. The empirical evidence also suggests that the lower tail dependence is much stronger than that of the upper tail, highlighting the importance of contagion during severe contractionary business cycles. Among the sample markets, Poland is shown to be particularly sensitive in this regard, while Hungary and Slovenia are the least sensitive.
•We investigate the oil–equity relationships for six CEE transition economies.•A time-varying copula approach is proposed to describe the dependence structure.•We find evidence of a positive dependence between the oil and the stock markets.•The dependence patterns change over time, particularly during the recent crisis.•The lower tail dependence is much stronger than that of the upper tail.
This paper uses the conditional vine copula approach to model the dependence structure between European-based carbon allowances and major energy prices. It makes two central contributions to the ...related literature. First, we extend the previous works of Reboredo (2013, 2014) by allowing for complete coverage of energy markets including natural gas, coal, and electricity, beyond the carbon-oil dependencies. Second, we simultaneously investigate the multivariate dependence among all variables in the system so that each of them can interact with the others based on a rich variety of bivariate copula functions. The consideration of the electricity market in this context offers the possibility to gauge its influences through the computation of the fuel-switching mechanism. We mainly find that there is a reliable and positive link between coal and gas prices, and between coal and oil prices, with or without the presence of electricity prices, while a weak and positive link is detected between Brent and gas prices. Carbon prices co-move only weakly with energy prices, and their link to oil and gas prices is negative. Moreover, the switch from coal to gas does not occur when the relative price of fuels taking into account carbon costs is assessed. This happens because the fuel-switching mechanism is still more costly than carbon abatement. Our findings remain intact when alternative electricity prices are used.
•We study the dependence structure between carbon allowances and major energy prices.•The influences of electricity prices allow to consider the fuel-switching mechanism.•Dependence is examined in a multivariate setting via copulas.•We find that carbon prices co-move only weakly with energy prices.•Also, the fuel-switching mechanism is still more costly than carbon abatement.
This study examines the risk spillovers between energy futures prices and Europe-based carbon futures contracts. We use a Markov regime-switching dynamic correlation, generalized autoregressive ...conditional heteroscedasticity (MS-DCC-GARCH) model in order to capture the time variations and structural breaks in the spillovers. We further evaluate the optimal weights, hedging effectiveness, and dynamic hedging strategies for the MS-DCC-GARCH model based on both the regime-dependent and regime-independent optimal hedge ratios. We finally complement our analysis by examining the in- and out-of sample hedging performances for alternative strategies. Our results mainly show significant volatility and time-varying risk transmission from energy markets to carbon market. We also find that spot and futures segments of the emission markets exhibit time-varying correlations and volatile hedging effectiveness. The subsample estimates show significant changes in the hedge effectiveness over the different phases of the European carbon market. These results have important investment and policy implications.
•Risk spillovers between energy and carbon futures prices are studied.•We make use of a Markov regime-switching DCC-GARCH.•Optimal weights, hedging effectiveness, and dynamic hedging strategies are evaluated.•There exists significant time-varying risk transmission from energy to carbon markets.•Carbon spot and futures segments exhibit volatile hedging effectiveness.
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