Symmetric and asymmetric effect of energy consumption and CO2 intensity on environmental quality: using nonlinear and asymmetric approach

Vasichenko, Kristina; Khan, Imran; Wang, Zhengbing

Symmetric and asymmetric effect of energy consumption and CO2 intensity on environmental quality: using nonlinear and asymmetric approach

2020

Vasichenko, Kristina | Khan, Imran | Wang, Zhengbing

This paper investigates the asymmetric impact of energy consumption and carbon dioxide (CO₂) intensity on the environmental quality in Russia. The ecological footprint (a proxy for environmental quality) was used as a dependent variable, while independent variables include energy consumption, CO₂ intensity, and gross fixed capital formation as a proxy of capital for time series data spanning from 1992 to 2016. To examine the asymmetric cointegration between the selected variables, the nonlinear autoregressive distributed lag (NARDL) method was used. The structural break unit root and BDS tests were used to check data stationarity and nonlinearity, respectively. Besides, the asymmetric causality test in Gauss software was employed to check the causal relationship among the variables. Among the considered variables, the asymmetric cointegration was found. A significant unidirectional symmetric causality was found running from energy consumption to ecological footprint (Wald test = 3.956*) and from ecological footprint to capital (Wald test = 10.115**), while asymmetrically, ecological footprint granger cause energy consumption (Wald test = 6.054**) and capital (Wald test = 6.739**) respectively. On the contrary, a neutral effect was found between environmental quality and CO₂ intensity. From these findings, environmental policies are also discussed. Specifically, policymakers should support modern, controlled emission technologies, including nuclear and renewable energy sources and green portfolio investment. Graphical abstract

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