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Exploring the Nexus between CO2 Emissions, Trade, and Sustainable Economic Growth: A Novel NARDL Approach

Author

Listed:
  • Muhammad Mohsin

    (Putra Business School, 43400 UPM Serdang, Selangor, Malaysia)

  • Mad Nasir Shamsudin

    (Putra Business School, 43400 UPM Serdang, Selangor, Malaysia)

  • Khalid Mahsan Alshammary

    (School of Distance Education, Universiti Sains Malaysia,)

  • Muddassar Sarfraz

    (School of Management, Zhejiang Shuren University, Hangzhou, China)

Abstract

This study investigates the nexus between CO2 emission, trade, GDP, and tourism in Pakistan during 1990-2019. We examined the asymmetric relationship between CO2 emission, international trade, GDP, and international tourism number of arrivals in Pakistan. Data Stationarity has been tested using the Augmented Dicky Fuller (ADF), Kwiatkowski-Phillips-Schmidt-Shin (KPSS), and Phillips-Perron (PP) tests for unit roots. We used the NARDL technique and Granger Causality to estimate the relationship between these environmental variables. The ARDL technique can potentially explore the dynamic nexus between CO2 emission, tourism, GDP, and trade. Our findings suggest a dynamic relationship between tourism, trade, CO2 emission, and GDP from Pakistan’s perspective. The outcomes reveal that negative and positive shocks to trade, GDP, and tourism affect CO2emissions in the short and long term. The Granger Causality findings also determined that causality is directed from Tourism toward CO2 emission, while unidirectional causality was found between CO2 emission and tourism. In this study, the graphs of the CUSUM and CUSUMQ determined the functional stability of the established relationship. This indicates that this model is a suitable and valuable strategy tool. The finding benefits macro-level policymakers and will provide important insight for the relevant stakeholders.

Suggested Citation

  • Muhammad Mohsin & Mad Nasir Shamsudin & Khalid Mahsan Alshammary & Muddassar Sarfraz, 2024. "Exploring the Nexus between CO2 Emissions, Trade, and Sustainable Economic Growth: A Novel NARDL Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 357-366, March.
    • Handle: RePEc:eco:journ2:2024-02-36
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    References listed on IDEAS

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    More about this item

    Keywords

    CO2 Emission; International Tourism Number of Arrival; Gross Domestic Product; Trade; Non-Linear Autoregressive Distributed Lags; Pakistan;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

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