Abstract
This study examines the impact of economic growth, energy consumption, trade openness, financial development on carbon emissions for the case of Turkey by using annual time series data for the period of 1960–2013. The Lee and Strazicich test suggests that the variables are suitable for applying the bounds testing approach to cointegration. The cointegration analysis reveals that there exists a long-run relationship between the per capita real income, per capita energy consumption, trade openness, financial development, and per capita carbon emissions in the presence of structural breaks. The results show that in the long run, carbon emissions are mainly determined by economic growth, energy consumption, trade openness, and financial development. The VECM Granger causality analysis indicates a long-run unidirectional causality running from economic growth, energy consumption, trade openness, and financial development to carbon emissions. The findings also show that the EKC hypothesis is valid for Turkey both in the long run and short run. The study provides some implications for policy makers to decrease carbon emissions in Turkey.
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Notes
It is generally known that the most common proxies for financial development are the ratio of money and quasi-money to GDP, the ratio of liquid liabilities to GDP, the ratio of domestic credit on private sector to GDP, and the ratio of domestic credit provided by the banking sector to GDP (Ang 2009; Sadorsky 2011). However, several studies (e.g., Shahbaz and Lean 2012; Mudakkar et al. 2013) use the ratio of domestic credit on private sector to GDP as the main indicator of financial development.
Free trade brings about environmental pollution owing to economic expansion. This is called the scale effect. According to technique effect, the import of efficient technologies can reduce environmental pollution. The composition effect implies that free trade can decrease or increase environmental pollution depending on whether there exists a comparative advantage in cleaner or dirty industries of a country (Antweiler et al. 2001).
ADF, PP, and Ng-Perron (MZa and MZt) unit root tests use the null hypothesis of a unit root. In these methods, the null hypothesis is tested against the alternative of stationarity. However, Ng-Perron test results are more reliable and consistent compared to the traditional unit root tests. In addition, the problem of over-rejection of null hypothesis can be solved by Ng-Perron test, and it can be performed for small sample size (DeJong et al. 1992).
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Cetin, M., Ecevit, E. & Yucel, A.G. The impact of economic growth, energy consumption, trade openness, and financial development on carbon emissions: empirical evidence from Turkey. Environ Sci Pollut Res 25, 36589–36603 (2018). https://doi.org/10.1007/s11356-018-3526-5
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DOI: https://doi.org/10.1007/s11356-018-3526-5