title: Revisiting the emissions-energy-trade nexus: evidence from the newly industrializing countries.
abstract: This paper applies Pedroni's panel cointegration approach to explore the causal relationship between trade openness, carbon dioxide emissions, energy consumption, and economic growth for the panel of newly industrialized economies (i.e., Brazil, India, China, and South Africa) over the period of 1970-2013. Our panel cointegration estimation results found majority of the variables cointegrated and confirm the long-run association among the variables. The Granger causality test indicates bidirectional causality between carbon dioxide emissions and energy consumption. A unidirectional causality is found running from trade openness to carbon dioxide emission and energy consumption and economic growth to carbon dioxide emissions. The results of causality analysis suggest that the trade liberalization in newly industrialized economies induces higher energy consumption and carbon dioxide emissions. Furthermore, the causality results are checked using an innovative accounting approach which includes forecast-error variance decomposition test and impulse response function. The long-run coefficients are estimated using fully modified ordinary least square (FMOLS) method, and results conclude that the trade openness and economic growth reduce carbon dioxide emissions in the long run. The results of FMOLS test sound the existence of environmental Kuznets curve hypothesis. It means that trade liberalization induces carbon dioxide emission with increased national output, but it offsets that impact in the long run with reduced level of carbon dioxide emissions.
authors.affiliation: Sukkur Institute of Business Administration (IBA-Sukkur), Sukkur, Pakistan. khalid.ahmed@iba-suk.edu.pk.
authors.forename: Khalid
authors.identifier: http://orcid.org/0000-0001-7162-1427
authors.initials: K
authors.lastname: Ahmed
authors.affiliation: Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan.
authors.forename: Muhammad
authors.initials: M
authors.lastname: Shahbaz
authors.affiliation: Faculty of Economics and Business Management, National University of Laos, PO BOX 7322, FEBM, NUoL, Dongdok, Vientiane, Laos.
authors.forename: Phouphet
authors.initials: P
authors.lastname: Kyophilavong
mesh_terms: D001938:Brazil; D002245:Carbon Dioxide / Q000032:analysis; D002681:China; D004784:Environmental Monitoring; D007194:India; D007221:Industry; D013019:South Africa; D001335:Vehicle Emissions
chemical_list: D001335:Vehicle Emissions; D002245:Carbon Dioxide
keywords: Carbon dioxide emissions; Energy consumption; Gross domestic production (GDP); Newly industrialized economies; Trade liberalization