Investigating the Asymmetric Effect of Economic Growth on Environmental Quality in the Next 11 Countries

Abstract

This study investigates the asymmetric cointegration and causal relationships between economic growth, carbon emissions, and energy consumption in the next eleven (11) countries over the period 1972–2013. The nonlinear autoregressive distributed lag (NARDL) bounds testing approach and nonpragmatic Granger causality tests are employed. This research’s empirical results have entrenched vital relationships that have significant policy implications. We affirm nonlinear cointegration among the variables in Bangladesh, Iran, Turkey, and Vietnam. The long-run asymmetric effect outcomes indicate a definite boom in economic growth, significantly increases carbon emission in Turkey, and a decline in Vietnam. Additionally, a positive shock to energy consumption significantly increases the carbon emission in Bangladesh, Iran, and Turkey, but a decrease in emissions in Vietnam. Findings from the Wald test reveal a long-run asymmetric effect between carbon emission and economic growth in Bangladesh, Iran, and Vietnam, and for Iran, an asymmetric short-run impact. Long-run and short-run asymmetric effects between carbon emission and energy consumption in Bangladesh and Iran. In terms of asymmetric causality results, bidirectional causality between carbon emission and economic growth was noted in Bangladesh and Turkey, and a unidirectional causality from economic growth to carbon emission in Egypt and South Korea. Energy consumption causes carbon emission in Bangladesh, Egypt, Pakistan, South Korea, and not vice versa. We determined a bidirectional asymmetric causality relationship between carbon emission and energy consumption in Vietnam and a unidirectional causality link from carbon emissions to Turkey’s energy consumption.