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Causal nexus between energy consumption and carbon dioxide emission for Malaysia using maximum entropy bootstrap approach

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Abstract

This study investigates the relationship between energy consumption and carbon dioxide emission in the causal framework, as the direction of causality remains has a significant policy implication for developed and developing countries. The study employed maximum entropy bootstrap (Meboot) approach to examine the causal nexus between energy consumption and carbon dioxide emission using bivariate as well as multivariate framework for Malaysia, over a period of 1975–2013. This is a unified approach without requiring the use of conventional techniques based on asymptotical theory such as testing for possible unit root and cointegration. In addition, it can be applied in the presence of non-stationary of any type including structural breaks without any type of data transformation to achieve stationary. Thus, it provides more reliable and robust inferences which are insensitive to time span as well as lag length used. The empirical results show that there is a unidirectional causality running from energy consumption to carbon emission both in the bivariate model and multivariate framework, while controlling for broad money supply and population density. The results indicate that Malaysia is an energy-dependent country and hence energy is stimulus to carbon emissions.

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Notes

  1. Koutroumanidis et al. (2009); Farhani and Rejeb (2012); Dritsaki and Dritsaki (2014)

  2. NEBM (2009)

  3. Besides CO2, some other gases such as monoxide, sulfur dioxide, etc. are also considered pollutant elements.

  4. Mohamed and Lee (2006)

  5. Chik and Rahim (2012); Bekhet and Yasmin (2013)

  6. This group was founded in 1991 after the disbanding of the Communist Bloc and included the Czech Republic, Slovakia (after the disbanding of Czechoslovakia in 1992), Hungary, and Poland.

  7. We estimated the system in (1) and (2) with p = 1 and p = 2, i.e., VAR(1), VAR(2)

  8. We estimated the system in (1) and (2) with p = 1 and p = 2, i.e., VAR(1), VAR(2) model.

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Authors and Affiliations

  1. Department of Management Sciences, COMSATS Institute of Information Technology, Abbottabad, Pakistan

    Sehrish Gul

  2. Institute of Graduate Studies, University of Malaya, 50603, Kuala Lumpur, Malaysia

    Xiang Zou

  3. Unit for the Enhancement of Academic Performance, University of Malaya, Lembah Pantai, 50603, Kuala Lumpur, Malaysia

    Che Hashim Hassan

  4. School of Economics, Finance and Banking College of Business, University Utara Malaysia, Sintok, Malaysia

    Muhammad Azam

  5. Department of Economics, University of Sargodha, Canal Campus, Lahore, Pakistan

    Khalid Zaman

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  1. Sehrish Gul
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  2. Xiang Zou
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  3. Che Hashim Hassan
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  4. Muhammad Azam
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  5. Khalid Zaman
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Correspondence to Khalid Zaman.

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Gul, S., Zou, X., Hassan, C.H. et al. Causal nexus between energy consumption and carbon dioxide emission for Malaysia using maximum entropy bootstrap approach. Environ Sci Pollut Res 22, 19773–19785 (2015). https://doi.org/10.1007/s11356-015-5185-0

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