Environmental Quality, Renewable Energy, Trade Openness and Economic Growth: Evidence from Two Groups of Developing Countries

Article type: Research Article

Authors: Mahmoodi, Majid^{a; *} | Mahmoodi, Elahe^b

Affiliations: [a] Faculty of Management, Economics and Accounting, Velayat University, Iranshahr, Iran | [b] Department of Economics, Yazd University, Yazd, Iran

Correspondence: [*] Corresponding Author. m.mahmoodi@velayat.ac.ir

Abstract: The purpose of this study is to examine the short-run and long-run causal relationship between economic growth, renewable energy, trade openness and carbon dioxide emission (CO2) as an indicator of environmental quality for two panels of developing countries including nine Asian developing countries and six European developing countries. A panel vector error correction model (Panel-VECM) causality is employed to investigate causality relation between the variables of interest. The empirical finding of short-run indicates bidirectional causality between GDP and CO2 emissions and unidirectional causality from renewable energy and trade openness to CO2 emissions for both Asian and European panels. Furthermore, there is evidence of unidirectional causality from GDP to renewable energy for Asian panel, while for European panel, bidirectional causality exist between renewable energy and GDP.

Keywords: Environmental quality, economic growth, renewable energy, trade openness

DOI: 10.3233/AJW-180030

Journal: Asian Journal of Water, Environment and Pollution, vol. 15, no. 2, pp. 177-185, 2018