Sahbi Farhani

Causal relationship between CO 2 emissions, real GDP, energy consumption, financial development, trade openness, and urbanization in Tunisia

The aim of this paper is to examine the causal relationship between CO2 emissions, real GDP, energy consumption, financial development, trade openness, and urbanization in Tunisia over the period of 1971–2012. The long-run relationship is investigated by the auto-regressive distributed lag (ARDL) bounds testing approach to cointegration and error correction method (ECM). The results of the analysis reveal a positive sign for the coefficient of financial development, suggesting that the financial development in Tunisia has taken place at the expense of environmental pollution. The Tunisian case also shows a positive monotonic relationship between real GDP and CO2 emissions. This means that the results do not support the validity of environmental Kuznets curve (EKC) hypothesis. In addition, the paper explores causal relationship between the variables by using Granger causality models and it concludes that financial development plays a vital role in the Tunisian economy.

Do coal consumption and industrial development increase environmental degradation in China and India

The present study is aimed to explore the relationship between coal consumption, industrial production, and CO2 emissions in China and India for the period of 1971–2011. The structural break unit root test and cointegrating approach have been applied. The direction of causal relationship between the variables is investigated by applying the VECM Granger causality test. Our results validate the presence of cointegration among the series in both countries. Our results also validate the existence of inverted U-shaped curve between industrial production and CO2 emissions for India, but for China, it is a U-shaped relationship. Coal consumption adds in CO2 emissions. The causality analysis reveals that industrial production and coal consumption Granger cause CO2 emissions in India. In the case of China, the feedback effect exists between coal consumption and CO2 emissions. Due to the importance of coal in China and India, any reduction in coal consumption will negatively affect their industrial value added as well as economic growth.