Abstract
The study aims to examine the energy-GDP-exports nexus employing structural break models after testing for co-integration in the form of total/aggregate annual time series data of South Asia region. The novelty of the study rests in dividing the aggregate energy into fossil fuel– and non-fossil fuel–based energy consumptions with structural break at 2008 considering the global financial crisis into the aggregate production function framework with labor, capital stock, and exports, ceteris paribus. The findings corroborate that in all the three models estimated with aggregate energy, fossil fuel–based energy, and non-fossil fuel–based energy consumptions respectively, there is evidence of long-run linkages among the selected variables. The analyses of long run elasticities estimated demonstrate that labor and capital have positive and significant impact on the real economic output before the break date in all the three models. It is however intriguing that aggregate energy use remains positive before and after the break date while fossil fuel–based energy becomes insignificant after 2008. Likely, non-fossil fuel–based energy corroborates insignificant impact on real economic output after 2008. These findings have important bearings for the energy conservation options in the region of South Asia especially for changing/reducing the fossil fuel share with the non-fossil fuels, ceteris paribus.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
Not applicable
References
Ahmed V, Zeshan M (2014) Decomposing change in energy consumption of the agricultural sector in Pakistan. Agrar S J Polit Econ 3(3):369–402
Awokuse TO (2008) Trade openess and economic growth: is growht export-led or import-led? Appl Econ 40:161–173
Bahmani-Oskooee M (1993) Export growth and economic growth: an application of cointegration and error-correction modeling. J Dev Areas 27(4):535–542
Bai J, Perron P (1998) Estimating and testing linear models with multiple structural changes. Econ 66:47–78
Bai J, Perron P (2003) Computation and analysis of multiple structural change models. J Appl Econ 18(1):1–22
Coe T, Helpman E (1995) International R&D spillovers. Eur Econ Rev 39:859–887
Dedeoğlu D, Kaya H (2013) Energy use, exports, imports and GDP: new evidence from the OECD countries. Energy Policy 57:469–476
Engle RF, Granger CW (1987) Co-integration and error correction: representation, estimation, and testing. Econ: J Econ Soc 55:251–276
Farhani S, Shahbaz M, Arouri M, Teulon F (2014) The role of natural gas consumption and trade in Tunisia’s output. Energy Policy 66:677–684
Grossman GM, Helpman E (1991) Endogenous innovation in the theory of growth. J Econ Perspect 8:23–44
Hansen BE (1992) Testing for parameter instability in linear models. J Policy Model 14(4):517–533
Hossain S (2014) Multivariate granger causality between economic growth, electricity consumption, exports and remittance for the panel of three SAARC countries. Eur Sci J ESJ 8(1)
Hu C, Tan Y (2016) Export spillovers and export performance in China. China Econ Rev 41(2016):75–89
IEA, International Energy Agency (2011) Energy Balances of NON-OECD Countries. Paris, France
Lean HH, Smyth R (2010a) On the dynamics of aggregate output, electricity consumption and exports in Malaysia: evidence from multivariate Granger causality tests. Appl Energy 87(6):1963–1971
Lean HH, Smyth R (2010b) Multivariate Granger causality between electricity generation, exports, prices and GDP in Malaysia. Energy 35(9):3640–3648
Narayan PK, Smyth R (2009) Multivariate Granger causality between electricity consumption, exports and GDP: evidence from a panel of Middle Eastern countries. Energy Policy 37(1):229–236
Omri A (2014) An international literature survey on energy-economic growth nexus: evidence from country-specific studies. Renew Sust Energ Rev 38:951–959
Ozturk I (2010) A literature survey on energy–growth nexus. Energy Policy 38(1):340–349
Raza SA, Shahbaz M, Nguyen DK (2015) Energy conservation policies, growth and trade performance: evidence of feedback hypothesis in Pakistan. Energy Policy 80:1–10
Sadorsky P (2011) Trade and energy consumption in the Middle East. Energy Econ 33(5):739–749
Sadorsky P (2012) Energy consumption, output and trade in South America. Energy Econ 34(2):476–488
Shahbaz M, Loganathan N, Zeshan M, Zaman K (2015) Does renewable energy consumption add in economic growth? An application of auto-regressive distributed lag model in Pakistan. Renew Sust Energ Rev 44:576–585
Shahbaz M, Nasreen S, Ling CH, Sbia R (2014) Causality between trade openness and energy consumption: what causes what in high, middle and low income countries. Energy Policy 70:126–143
Shakeel M (2019) Electricity conservation dynamics with GDP and exports in Pakistan. WALIA J 35(1):39–44
Shakeel, M, Ahmed, A. Economic growth, exports, and role of energy conservation: evidence from panel co-integration-based causality models in South Asia. Energy Environ 2020.Epub ahead of print 16 January 2020. https://doi.org/10.1177/0958305X19899372
Shakeel M, Iqbal MM (2014) Energy consumption and GDP with the role of trade in South Asia. In Energy Systems and Policies (ICESP), 2014 International Conference (pp. 1–5). https://doi.org/10.1109/ICESP.2014.7346987
Shakeel M, Iqbal MM, Majeed MT (2014) Energy consumption, trade and GDP: a case study of South Asian countries. Pak Dev Rev 53:461–476
Shakeel M, Salam (2020) Energy-GDP-exports nexus and energy conservation: evidence from Pakistan and South Asia. Environ Sci Pollut Res 27:27807–27818. https://doi.org/10.1007/s11356-020-08932-9
Smyth R, Narayan PK (2015) Applied econometrics and implications for energy economics research. Energy Econ 50:351–358
Stern DI (2000) A multivariate cointegration analysis of the role of energy in the US macroeconomy. Energy Econ 22(2):267–283
Stern DI (2004) Economic growth and energy. Encycl Energy 2(00147):35–51
Stresing R, Lindenberger D, Kümmel R (2008) Co-integration of output, capital, labor, and energy. Eur Phys J B 66(2):279–287
Tsiotras A, Estache A (2014) In the short run, energy efficiency concerns and trade protection hurt each other and growth, but in the long run, not necessarily so: 1980-2010 Latin American Evidence (No. ECARES 2014-38). ULB--Universite Libre de Bruxelles
World Bank (2020) World Development Indicator. Accessed at http://databank.worldbank.org/data/reports.aspx?Code=NY.GDP.MKTP.CD&id=1ff4a498&report_name=Popular-Indicators&populartype=series&ispopular=y. Accessed 16 Apr 2020
Zeshan M (2013) Finding the cointegration and causal linkages between the electricity production and economic growth in Pakistan. Econ Model 31:344–350
Zeshan M, Ahmed V (2013) Energy, environment and growth nexus in South Asia. Environ Dev Sustain 15(6):1465–1475
Zeshan M, Malik WS, Nasir M (2019) Oil price shocks, systematic monetary policy and economic activity. Pak Dev Rev 58(1):65–81
Acknowledgments
It is acknowledged that the present work emerged from the future prospect given in the PhD dissertation of the author therein grateful to his supervisor Dr. Abdul Salam, Professor of Economics and Chair Abdul Qadir Memorial, Punjab University of Lahore, Pakistan, for his support. We are also thankful to the anonymous reviewers for their useful comments. The author acknowledges the moral support of lovely mom of mohtarma Fatima Daud during this research work and in his academic career since 2017.
Author information
Authors and Affiliations
Contributions
Muhammad Shakeel has organized the idea and developed the methodological and econometric models. He also interpreted the results and all the other steps in the finalization of the work.
Corresponding author
Ethics declarations
Conflict of interest
The author declares that there is no conflict of interest.
Ethical approval
Not applicable
Consent to participate
The author agreed freely to participate in the present work.
Consent to publish
The author agreed freely to publish the present work in this journal.
Additional information
Responsible Editor: Nicholas Apergis
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Shakeel, M. Economic output, export, fossil fuels, non-fossil fuels and energy conservation: evidence from structural break models with VECMs in South Asia. Environ Sci Pollut Res 28, 3162–3171 (2021). https://doi.org/10.1007/s11356-020-10729-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-020-10729-9