Economic Growth, CO2 Emissions, Electricity Production, and Consumption Nexus in Bangladesh
DOI:
https://doi.org/10.18034/abr.v11i1.517Keywords:
Electricity Production, Electricity Consumption, CO2, GDP, CausalityAbstract
This paper seeks to find the causal relationship between economic growth, electricity consumption, carbon emissions, electricity production from oil, and electricity production from gas. The data were taken from World Development Index (WDI) for the period of 1972-2014. For stationarity checking, visualization and some econometrics techniques like ADF and Phillips-Perron test have been adopted. For testing the long-run relationships among the variables, the Johansen cointegration testing procedure has been considered. This test ensured that there are long-run relationships among the variables. To capture the short-run dynamics, a VECM test has been done, and to find the direction of causation, the Granger causality approach has been tested. The results find that there was a bidirectional causality from CO2 emissions to gross domestic product (GDP) and from electricity production from gas to GDP where unidirectional causality was found from GDP to electricity consumption and electricity production from oil to GDP. CUMSUM and CUSUM approaches have also been considered to test the stability of the parameters. Policy implications of the research indicate that Bangladesh should give importance to low carbon emission technologies to reduce the CO2 emissions level with a view to keeping Bangladesh safe from natural calamities along with economic growth.
JEL Classifications: C32, O13, Q43
Downloads
References
Ahmad, A., Zhao, Y., Shahbaz, M., Bano, S., Zhang, Z., Wang, S., & Liu, Y. (2016). Carbon emissions, energy consumption and economic growth: An aggregate and disaggregate analysis of the Indian economy. Energy Policy, 96, 131–143. https://doi.org/10.1016/j.enpol.2016.05.032
Al-Mulali, U., & Che Sab, C. N. B. (2018). Electricity consumption, CO2 emission, and economic growth in the Middle East. ENERGY SOURCES, PART B: ECONOMICS, PLANNING, AND POLICY, https://doi.org/10.1080/15567249.2012.658958
Algarini, A. (2020). THE RELATIONSHIP AMONG GDP, CARBON DIOXIDE EMISSIONS, ENERGY CONSUMPTION, AND ENERGY PRODUCTION FROM OIL AND GAS IN SAUDI ARABIA. International Journal of Energy Economics and Policy, 10(1), 280–285. https://doi.org/10.32479/ijeep.8345
Dickey, D., & Fuller, W. (1981). Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root. Econometrica, 49(4), 1057-1072. doi:10.2307/1912517
Anastacio, J. A. R. (2017). Economic growth, CO2 emissions and electric consumption: Is there an environmental Kuznets curve? An empirical study for North America countries. International Journal of Energy Economics and Policy, 7(2), 65–71.
Chandra Ghosh, B. (2014). Economic Growth, CO2 Emissions and Energy Consumption: The Case of Bangladesh. International Journal of Business and Economics Research, 3(6), 220. https://doi.org/10.11648/j.ijber.20140306.13
Sustainable Development Goals | UNDP, https://www.undp.org/content/undp/en/home/sustainable-development-goals.html (Accessed on 12 November, 2020)
Cowan, W. N., Chang, T., Inglesi-Lotz, R., & Gupta, R. (2014). The nexus of electricity consumption, economic growth and CO2 emissions in the BRICS countries. Energy Policy, 66, 359–368. https://doi.org/10.1016/j.enpol.2013.10.081
Dhungel, K. R. (2019). Linkages between electricity consumption and economic growth. New Futures for South Asia, 20, 194–203. https://doi.org/10.4324/9780367816827-15
Faisal, F., Tursoy, T., Gunsel Resatoglu, N., & Berk, N. (2018). Electricity consumption, economic growth, urbanisation and trade nexus: empirical evidence from Iceland. Economic Research-Ekonomska Istrazivanja , 31(1), 664–680. https://doi.org/10.1080/1331677X.2018.1438907
Sims, C.A. (1980), Macroeconomics and reality. Econometrica: Journal of the Econometric Society, 48, 1-48.
Gao, J., & Zhang, L. (2014). Electricity Consumption-economic growth-CO2 Emissions nexus in sub-saharan Africa: Evidence from panel cointegration. African Development Review, 26(2), 359–371. https://doi.org/10.1111/1467-8268.12087
Golam Ahamad, M., & Nazrul Islam, A. K. M. (2011). Electricity consumption and economic growth nexus in Bangladesh: Revisited evidences. Energy Policy, 39(10), 6145–6150. https://doi.org/10.1016/j.enpol.2011.07.014
Engle, R. F., & Granger, C. W. J. (1987). Co-Integration and Error Correction: Representation, Estimation, and Testing. Econometrica, 55(2), 251. doi:10.2307/1913236
Hossen, S. S. (2018). Does Electricity Consumption affect Economic Growth in Bangladesh? Economic Affairs, 63(2), 449–458. https://doi.org/10.30954/0424-2513.2.2018.22
Ibrahiem, D. M. (2018). Investigating the causal relationship between electricity consumption and sectoral outputs: evidence from Egypt. Energy Transitions, 2(1–2), 31–48. https://doi.org/10.1007/s41825-018-0009-8
Ikegami, M., & Wang, Z. (2016). The long-run causal relationship between electricity consumption and real GDP: Evidence from Japan and Germany. Journal of Policy Modeling, 38(5), 767–784. https://doi.org/10.1016/j.jpolmod.2016.10.007
Bangladesh CO2 Emissions – Worldometer, https://www.worldometers.info/co2-emissions/bangladesh-co2-emissions/ (Accessed on 1 April, 2021)
Jahangir Alam, M., Ara Begum, I., Buysse, J., & Van Huylenbroeck, G. (2012). Energy consumption, carbon emissions and economic growth nexus in Bangladesh: Cointegration and dynamic causality analysis. Energy Policy, 45, 217–225. https://doi.org/10.1016/j.enpol.2012.02.022
Johamen, S., & Jtiselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with appucations to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169–210.
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12(2–3), 231–254. https://doi.org/10.1016/0165-1889(88)90041-3
Khobai, H. (2018). Electricity consumption and economic growth: A panel data approach for Brazil, Russia, India, China and South Africa countries. International Journal of Energy Economics and Policy, 8(3), 283–289.
Jbir, R., Zouari-Ghorbel, S. (2009), Recent oil price shock and Tunisian economy. Energy Policy, 37(3), 1041-1051.
Belloumi, M. (2009), Energy consumption and GDP in Tunisia: Cointegration and causality analysis. Energy Policy, 37(7), 2745-2753.
Le Quang, C. (2011). Electricity Consumption and Economic Growth in Vietnam: A Cointegration and Causality Analysis. Journal of Economics and Development, 12(11), 24–36. https://doi.org/10.33301/2011.13.03.02
Lean, H. H., & Smyth, R. (2010). CO2 emissions, electricity consumption and output in ASEAN. Applied Energy, 87(6), 1858–1864. https://doi.org/10.1016/j.apenergy.2010.02.003
https://bpdb.gov.bd/bpdb_new/index.php/site/page/13e9-2cc0-ce41-9c09-088d-94d5-f546-04a6-b4fa-1d18 (Accessed on 1 April, 2021)
Long, X., Naminse, E. Y., Du, J., & Zhuang, J. (2015). Nonrenewable energy, renewable energy, carbon dioxide emissions and economic growth in China from 1952 to 2012. Renewable and Sustainable Energy Reviews, 52, 680–688. https://doi.org/10.1016/j.rser.2015.07.176
Pesaran, H.M., Pesaran, B., 1997. In: Microfit 4.0, An Interactive Econometric Analysis, Camfit Data, UK.
Lu, W. C. (2017). Electricity consumption and economic growth: Evidence from 17 Taiwanese industries. Sustainability (Switzerland), 9(1). https://doi.org/10.3390/su9010050
Mozumder, P., & Marathe, A. (2007). Causality relationship between electricity consumption and GDP in Bangladesh. Energy Policy, 35(1), 395–402. https://doi.org/10.1016/j.enpol.2005.11.033
Njoke, M. L., Wu, Z., & Tamba, J. G. (2019). Empirical analysis of electricity consumption, CO2 emissions and economic growth: Evidence from Cameroon. International Journal of Energy Economics and Policy, 9(5), 63–73. https://doi.org/10.32479/ijeep.7915
Ozturk, I., & Acaravci, A. (2011). Electricity consumption and real GDP causality nexus: Evidence from ARDL bounds testing approach for 11 MENA countries. Applied Energy, 88(8), 2885–2892. https://doi.org/10.1016/j.apenergy.2011.01.065
Pempetzoglou, M. (2014). Electricity consumption and economic growth: A linear and nonlinear causality investigation for Turkey. International Journal of Energy Economics and Policy, 4(2), 263–273.
Sarker, M. A. R., & Alam, K. (2010). Nexus between Electricity Generation and Economic Growth in Bangladesh. Asian Social Science, 6(12), 16–22. https://doi.org/10.5539/ass.v6n12p16
Sekantsiand, L., & Motlokoa, M. (2016). Evidence on the Nexus Between Electricity Consumption and Economic Growth through Empirical Investigation of Uganda. Review of Economic and Business Studies, 8(1), 149–165. https://doi.org/10.1515/rebs-2016-0020
Shahbaz, M., & Feridun, M. (2012). Electricity consumption and economic growth empirical evidence from Pakistan. Qual Quant, 46:1583–1599, DOI 10.1007/s11135-011-9468-3
Shahbaz, M., & Lean, H. H. (2012). The dynamics of electricity consumption and economic growth: A revisit study of their causality in Pakistan. Energy, 39(1), 146–153. https://doi.org/10.1016/j.energy.2012.01.048
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12(2–3), 231–254. https://doi.org/10.1016/0165-1889(88)90041-3
Shahbaz, M., Salah Uddin, G., Ur Rehman, I., & Imran, K. (2014). Industrialization, electricity consumption and CO 2 emissions in Bangladesh. Renewable and Sustainable Energy Reviews, 31, 575–586. https://doi.org/10.1016/j.rser.2013.12.028
Granger, C.W.J. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37(3), 424. Doi:10.2307/1912791
Wolde-Rufael, Y. (2014). Electricity consumption and economic growth in transition countries: A revisit using bootstrap panel Granger causality analysis. Energy Economics, 44, 325–330. https://doi.org/10.1016/j.eneco.2014.04.019
--0--
Published
Issue
Section
License
Asian Business Review is an Open Access journal. Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal the right of first publication with the work simultaneously licensed under a CC BY-NC 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of their work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal. We require authors to inform us of any instances of re-publication.
How to Cite
