Asian Journal of Economic Modelling

Can CO2 emissions cease growing in Côte d'Ivoire? An empirical analysis of the effects of economic growth, energy consumption, industrialization, and urbanization in the presence of structural breaks

Bi Goli Jean Jacques Iritie — 2024-07-24

This paper aims at examining the effects of economic growth, energy use, industrialization, and urbanization on carbon dioxide (CO2) emissions in Côte d'Ivoire over the period from 1970 to 2016. It also analyzes the conditions under which these emissions can cease growing. We used cointegrating regression models, like the fully modified ordinary least square (FMOLS), the canonical cointegration regression (CCR), and the dynamic ordinary least square (DOLS), to figure out the long-run coefficients. The vector error correction model (VECM) is used in the causality analysis. Finally, we carried out an analysis of the conditional thresholds for reducing CO2 emissions. The results indicate that there is a long-term, significant positive relationship between economic growth, energy use, urbanization, and industrialization, as well as carbon dioxide emissions, in the presence of structural breaks. In other words, they increase CO2 emissions in Côte d'Ivoire. The causality analysis results reveal a long-term bidirectional causal link between industrialization and CO2 emissions, as well as long-term unidirectional causal links from each independent variable to CO2 emissions. The conditional threshold analysis for reducing CO2 emissions shows that under the current economic conditions of the country, pollution will continue to increase. Our findings corroborate the conclusions of COP28, the most recent United Nations conference on climate change. Therefore, a good carbon dioxide pricing or taxation policy for polluting industries, law enforcement and regulations, and the implementation of effective strategies for the promotion and development of clean and renewable energy use will effectively reverse the trend in Côte d'Ivoire.

The effect of shadow economy on foreign direct investment: Empirical evidence in emerging market economies 1988-2018

Aghni Majida Martakusuma — 2024-08-13

This paper aims to examine the effect of shadow economy on foreign direct investment (FDI) in emerging market economies (EMEs) starting from 1988 to 2018. The error-correction model (ECM) is applied to estimate the dynamic panel data in the short run model, and for the long run model, this study applied ordinary panel data approach to both the fixed effect model (FEM) and the random effect model (REM). This study considers the global financial crisis of 1998 by dividing the estimation into three periods, i.e., pre-crisis, post-crisis, and all periods. The results show that shadow economy had a significantly negative effect on FDI inward both in the long run and the short run during the pre-crisis period, while economic growth, trade openness, policy rate, population, and infrastructure had various significant effects on FDI inward. The long-run estimation revealed that economic growth, policy rate, inflation, and the human development index (HDI) were all significant factors. Only the exchange rate, as one of efficiency-seeking motives and macroeconomic factors, has a significant role in FDI in EMEs. This analysis suggests that policymakers need to consider shadow economy along with investor motives and macroeconomic variables to provide more FDI, while investors need to consider the country’s advantages that could potentially provide a rate on return on investment.

The nexus between economic growth, urbanization, technological advancement, and CO2 emissions: Where does the GCC stand?

Jihen Bousrih — 2024-08-13

Most countries, particularly developing and growing economies, have the primary goal of achieving greater economic growth in order to improve living standards. However, a boost in economic activity raises energy demand, which in turn raises carbon dioxide emissions and deteriorates the environment. This paper investigates the effect of economic growth, energy consumption, and research and development on CO2 emissions in Gulf Council Cooperation (GCC) countries. The study uses the Vector Error Correction Model to investigate the short- and long-run synergy between variables over the period 2000–2022. The results indicate that boosting economic activity requires more energy consumption and will increase CO2 emissions in the long run. Investing in research and development can enhance the quality of the environment, yet the effect of urbanization on CO2 emissions in GCC countries remains unclear. To reduce energy consumption, it is first necessary to expand renewable energy sources and encourage energy-saving techniques. Then, to lower CO2 emissions, the government must promote investments in green technologies, particularly in manufacturing. Third, the government should encourage sustainable urbanization by putting laws in place that encourage the growth of green cities and transportation networks.

The impact of public spending on economic growth in Morocco from 1960 to 2022: An ARDL bounds approach

Zineb El Aissaoui — 2024-09-19

The impact of public spending on economic growth is a major topic in macroeconomics that has been debated for a long time. This debate has recently intensified particularly in the Moroccan context. This research examines how public spending has affected economic growth in Morocco from 1960 to 2022. To achieve this objective, we have selected a quantitative approach with an econometric analysis to assess the variables in question. Research methodology employs the Autoregressive Distributed Lag (ARDL) bounds testing approach. This study analyzes at a time the short- and long-run effects of public spending on economic growth using time-series data. The study's findings indicate a significant and positive impact of public expenditures on economic growth both in the short- and long- run. The results of this study are consistent with earlier studies despite using different variables that support the validity of our findings. Our research provides robust insights into the dynamics of public spending and economic growth in Morocco by spanning such an extensive period. The ARDL bounds testing approach allows for a nuanced understanding of the immediate and delayed effects of public expenditures. The findings of this research underscore the importance of public spending in fostering economic growth and highlight the potential benefits of maintaining or increasing such expenditures.