Title: Interaction between CO₂ emissions, energy consumption and economic growth in the Middle East: panel causality evidence

Authors: Seyi Saint Akadiri; Ada Chigozie Akadiri

Addresses: Department of Economics, Institute of Graduate Studies and Research Faculty of Business and Economics, Eastern Mediterranean University, Famagusta, North Cyprus, via Mersin 10, Turkey ' Department of Economics, Institute of Graduate Studies and Research Faculty of Business and Economics, Eastern Mediterranean University, Famagusta, North Cyprus, via Mersin 10, Turkey

Abstract: The Middle East is one of the biggest suppliers of energy resources in the world. Through electricity production, transportation, oil and gas industries, industrial heating, the quality of air, environment and the whole economy at large is being affected. It is on this premise, this study examine the long-run equilibrium relationship and Granger causality interaction between CO₂ emissions, income per capita and energy use caused by these traffics. We employ second generation panel approach that account for cross-sectional dependency, panel bootstrap cointegration testing as introduced by Westerlund and Edgerton (2007) and Granger causality testing procedure as proposed by Dumitrescu and Hurlin (2012). These econometrics techniques are robust for panel cointegration and panel Granger causality analysis. From our empirical results, we found evidence in support of a long-run equilibrium relationship among the variables, a bidirectional causality running from CO₂ to energy use, and unidirectional causality running from CO₂ emissions to income per capita. However, between income per capita and CO₂ emissions, income per capita to energy use and energy use to income per capita all without a feedback in the long-run. We propose significant policy implications based on our empirical results.

Keywords: CO₂ emissions; economic growth; energy consumption; cointegration; causality; panel approach; Middle East.

DOI: 10.1504/IJETP.2020.105507

International Journal of Energy Technology and Policy, 2020 Vol.16 No.2, pp.105 - 118

Received: 19 Oct 2017
Accepted: 16 Jan 2018
Published online: 03 Mar 2020 *

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