Causal nexus between energy consumption and carbon dioxide emission for Malaysia using maximum entropy bootstrap approach.
This study investigates the relationship between energy consumption and carbon dioxide emission in the causal framework, as the direction of causality remains has a significant policy implication for developed and developing countries. The study employed maximum entropy bootstrap (Meboot) approach to examine the causal nexus between energy consumption and carbon dioxide emission using bivariate as well as multivariate framework for Malaysia, over a period of 1975-2013. This is a unified approach without requiring the use of conventional techniques based on asymptotical theory such as testing for possible unit root and cointegration. In addition, it can be applied in the presence of non-stationary of any type including structural breaks without any type of data transformation to achieve stationary. Thus, it provides more reliable and robust inferences which are insensitive to time span as well as lag length used. The empirical results show that there is a unidirectional causality running from energy consumption to carbon emission both in the bivariate model and multivariate framework, while controlling for broad money supply and population density. The results indicate that Malaysia is an energy-dependent country and hence energy is stimulus to carbon emissions.
Department of Management Sciences, COMSATS Institute of Information Technology, Abbottabad, Pakistan.
Sehrish
S
Gul
Institute of Graduate Studies, University of Malaya, 50603, Kuala Lumpur, Malaysia. xiang.zou24@yahoo.com.
Xiang
X
Zou
Unit for the Enhancement of Academic Performance, University of Malaya, Lembah Pantai, 50603, Kuala Lumpur, Malaysia.
Che Hashim
CH
Hassan
School of Economics, Finance and Banking College of Business, University Utara Malaysia, Sintok, Malaysia.
Muhammad
M
Azam
Department of Economics, University of Sargodha, Canal Campus, Lahore, Pakistan. Khalid_zaman786@yahoo.com.
Khalid
K
Zaman
D000393:Air Pollutants / Q000032:analysis*; D002245:Carbon Dioxide / Q000032:analysis*; D003906:Developing Countries; D057217:Economic Development; D004736:Energy-Generating Resources; D019277:Entropy; D008296:Malaysia; D008962:Models, Theoretical; D015999:Multivariate Analysis; D011156:Population Density
D000393:Air Pollutants; D002245:Carbon Dioxide
Carbon dioxide emission; Energy consumption; Malaysia; Maximum entropy bootstrap approach