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The four-way linkages between renewable energy, environmental quality, trade and economic growth: a comparative analysis between high and middle-income countries

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Abstract

This paper examines the four-way interrelationship between renewable energy, environment, foreign trade and growth using simultaneous-equation panel data models for 24 middle- and high-income countries over the period 1990–2011. Our findings show that, for the high-income countries, there is a bidirectional causality between renewable energy and growth, between CO\(_{2}\) emissions and economic growth, between foreign trade and growth and between renewable energy and CO\(_{2}\) emissions. However, there is a unidirectional causality between foreign trade and renewable energy and between emissions and trade. In the case of middle-income countries, there is also a bidirectional causality between renewable energy and growth, between CO\(_{2}\) emissions and growth, between trade and growth, between trade and renewable energy and between CO\(_{2}\) emissions and trade. On the other hand, there is a unidirectional causality, running from renewable energy to CO\(_{2}\) emissions. Understanding these controversial scenarios is prerequisite to reaching an international agreement on climate change in order to build sound economic policies and improving the environmental quality to sustain economic development.

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Notes

  1. It should be mentioned that the above classification was consistent with the World Bank definition for classification based on GNI in 2000, countries are classified as low income if GNI is lower than $826, as middle income countries if $826=GNI=$10,065, and as high income countries if GNI is greater than $10,065.

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Authors and Affiliations

  1. Faculty of Economics and Management, University of Sfax, Sfax, Tunisia

    Sofien Tiba & Mohamed Frikha

  2. The College of Business and Economics, Qassim University, P.O. Box 6633, Qassim, 14452, Saudi Arabia

    Anis Omri

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  1. Sofien Tiba
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Tiba, S., Omri, A. & Frikha, M. The four-way linkages between renewable energy, environmental quality, trade and economic growth: a comparative analysis between high and middle-income countries. Energy Syst 7, 103–144 (2016). https://doi.org/10.1007/s12667-015-0171-7

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