IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i2p565-d133016.html
   My bibliography  Save this article

The Economic Determinants of Bioenergy Trade Intensity in the EU-28: A Co-Integration Approach

Author

Listed:
  • Mohd Alsaleh

    (Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor DE, Malaysia)

  • Abdul Samad Abdul-Rahim

    (Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor DE, Malaysia)

Abstract

This paper examines the dynamic effect of the economic determinants on bilateral trade intensity of the European Union (EU) region’s bioenergy industry outputs. The authors adopt the panel co-integration model approach to estimate annual trade intensity data of the EU-28 countries’ bioenergy industry outputs from 1990 to 2013. This study investigated the long-term influence of the rate of real exchange, gross domestic product (GDP), and export price on the trade intensity of bioenergy industry applying fully modified oriented least square (FMOLS), dummy oriented least square (DOLS), and pooled mean group (PMG) models. In the current study, the findings boost the empirical validity of the panel co-integration model through FMOLS, indicating that depreciation has improved the trade intensity. This study has further investigated, through the causality test, a distinct set of countries. FMOLS estimation does find proof of the long run improvement of trade intensity. Thus, the result shows that the gross domestic product (GDP) and the real exchange rate have a positive and noteworthy influence on the EU-28 region trade intensity of the bioenergy industry. Moreover, the export price affects negatively and significantly the trade intensity of the bioenergy industry in the EU-28 countries.

Suggested Citation

  • Mohd Alsaleh & Abdul Samad Abdul-Rahim, 2018. "The Economic Determinants of Bioenergy Trade Intensity in the EU-28: A Co-Integration Approach," Sustainability, MDPI, vol. 10(2), pages 1-20, February.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:2:p:565-:d:133016
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/2/565/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/2/565/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jianhong Zhang & Arjen Witteloostuijn, 2004. "Economic openness and trade linkages of China: An empirical study of the determinants of chinese trade intensities from 1993 to 1999," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(2), pages 254-281, June.
    2. Alsaleh, Mohd & Abdul-Rahim, A.S. & Mohd-Shahwahid, H.O., 2017. "An empirical and forecasting analysis of the bioenergy market in the EU28 region: Evidence from a panel data simultaneous equation model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 1123-1137.
    3. Lamers, Patrick & Hamelinck, Carlo & Junginger, Martin & Faaij, André, 2011. "International bioenergy trade--A review of past developments in the liquid biofuel market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(6), pages 2655-2676, August.
    4. Bordo, Michael D. & Choudhri, Ehsan U. & Fazio, Giorgio & MacDonald, Ronald, 2017. "The real exchange rate in the long run: Balassa-Samuelson effects reconsidered," Journal of International Money and Finance, Elsevier, vol. 75(C), pages 69-92.
    5. Gourdon, Julien, 2009. "Explaining Trade Flows: Traditional and New Determinants of Trade Patterns," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 53-86.
    6. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    7. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    8. Julien Gourdon, 2009. "Explaining Trade Flows: Traditional and New determinants of Trade Patterns," Post-Print hal-00368812, HAL.
    9. Aruna Kumar Dash, 2013. "Bilateral J-Curve between India and Her Trading Partners: A Quantitative Perspective," Economic Analysis and Policy, Elsevier, vol. 43(3), pages 318-338, December.
    10. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    11. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    12. Matzenberger, Julian & Kranzl, Lukas & Tromborg, Eric & Junginger, Martin & Daioglou, Vassilis & Sheng Goh, Chun & Keramidas, Kimon, 2015. "Future perspectives of international bioenergy trade," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 926-941.
    13. Julien Gourdon, 2011. "Explaining Trade Flows: Traditional and New Determinants of Trade Patterns," Working Papers halshs-00557125, HAL.
    14. Bottasso, Anna & Castagnetti, Carolina & Conti, Maurizio, 2013. "And yet they Co-move! Public capital and productivity in OECD," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 713-729.
    15. Lynge Nielsen, 2011. "Classifications of Countries Basedon their Level of Development: How it is Done and How it Could Be Done," IMF Working Papers 2011/031, International Monetary Fund.
    16. Lee, Chien-Chiang & Chang, Chun-Ping, 2008. "Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data," Resource and Energy Economics, Elsevier, vol. 30(1), pages 50-65, January.
    17. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 653-670, November.
    18. Narayan, Paresh Kumar & Smyth, Russell & Prasad, Arti, 2007. "Electricity consumption in G7 countries: A panel cointegration analysis of residential demand elasticities," Energy Policy, Elsevier, vol. 35(9), pages 4485-4494, September.
    19. Dembatapitiya, Pradeepa, 2013. "An Analysis of Determinants of Agriculture Trade Intensities of South Asia," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 14, pages 1-24.
    20. Junginger, Martin & van Dam, Jinke & Zarrilli, Simonetta & Ali Mohamed, Fatin & Marchal, Didier & Faaij, Andre, 2011. "Opportunities and barriers for international bioenergy trade," Energy Policy, Elsevier, vol. 39(4), pages 2028-2042, April.
    21. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
    22. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    23. Peter Pedroni, 2001. "Purchasing Power Parity Tests In Cointegrated Panels," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 727-731, November.
    24. Koray, Faik, 1990. "The trade balance and the exchange rate," Journal of Macroeconomics, Elsevier, vol. 12(2), pages 279-288.
    25. repec:bla:obuest:v:61:y:1999:i:0:p:653-70 is not listed on IDEAS
    26. Prakash, Kushneel & Maiti, Dibyendu, 2016. "Does devaluation improve trade balance in small island economies? The case of Fiji," Economic Modelling, Elsevier, vol. 55(C), pages 382-393.
    27. Kanjilal, Kakali & Ghosh, Sajal, 2014. "Income and price elasticity of gold import demand in India: Empirical evidence from threshold and ARDL bounds test cointegration," Resources Policy, Elsevier, vol. 41(C), pages 135-142.
    28. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    29. Dedeoğlu, Dinçer & Kaya, Hüseyin, 2013. "Energy use, exports, imports and GDP: New evidence from the OECD countries," Energy Policy, Elsevier, vol. 57(C), pages 469-476.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nadeem, Muhammad & Wang, Zilong & Shakeel, Muhammad, 2023. "Real output, fossil fuels, clean fuels and trade dynamics: New insights from structural break models in China," Applied Energy, Elsevier, vol. 350(C).
    2. Mohd Alsaleh & A. S. Abdul-Rahim, 2019. "Financial Development and Bioenergy Consumption in the EU28 Region: Evidence from Panel Auto-Regressive Distributed Lag Bound Approach," Resources, MDPI, vol. 8(1), pages 1-13, February.
    3. Chen, Jiandong & Xie, Qiaoli & Shahbaz, Muhammad & Song, Malin & Wu, Yuliang, 2021. "The fossil energy trade relations among BRICS countries," Energy, Elsevier, vol. 217(C).
    4. Bunea, Ovidiu-Iulian & Corbos, Razvan-Andrei & Popescu, Ruxandra-Irina, 2019. "Influence of some financial indicators on return on equity ratio in the Romanian energy sector - A competitive approach using a DuPont-based analysis," Energy, Elsevier, vol. 189(C).
    5. Gong, Xu & Chen, Liqiang & Lin, Boqiang, 2020. "Analyzing dynamic impacts of different oil shocks on oil price," Energy, Elsevier, vol. 198(C).
    6. Sun, Qingru & An, Haizhong & Gao, Xiangyun & Guo, Sui & Wang, Ze & Liu, Siyao & Wen, Shaobo, 2019. "Effects of crude oil shocks on the PPI system based on variance decomposition network analysis," Energy, Elsevier, vol. 189(C).
    7. Zheng, Huiling & Zhou, Jinsheng & Gao, Xiangyun & Xi, Xian & Liu, Donghui & Zhao, Yiran, 2021. "Global impacts of the topological structure of industrial driving networks on energy intensity," Energy, Elsevier, vol. 225(C).
    8. Ashfaq, Saleha & Tang, Yong & Maqbool, Rashid, 2019. "Volatility spillover impact of world oil prices on leading Asian energy exporting and importing economies’ stock returns," Energy, Elsevier, vol. 188(C).
    9. Wang, Qiang & Jiang, Feng, 2019. "Integrating linear and nonlinear forecasting techniques based on grey theory and artificial intelligence to forecast shale gas monthly production in Pennsylvania and Texas of the United States," Energy, Elsevier, vol. 178(C), pages 781-803.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fang, Zheng & Chang, Youngho, 2016. "Energy, human capital and economic growth in Asia Pacific countries — Evidence from a panel cointegration and causality analysis," Energy Economics, Elsevier, vol. 56(C), pages 177-184.
    2. Karmaker, Shamal Chandra & Hosan, Shahadat & Chapman, Andrew J. & Saha, Bidyut Baran, 2021. "The role of environmental taxes on technological innovation," Energy, Elsevier, vol. 232(C).
    3. Kahia, Montassar & Ben Aissa, Mohamed Safouane, 2014. "Renewable and non-renewable energy consumption and economic growth: Evidence from MENA Net Oil Exporting Countries," MPRA Paper 80776, University Library of Munich, Germany.
    4. Luisanna Onnis & Patrizio Tirelli, 2010. "Challenging the popular wisdom. New estimates of the unobserved economy," Working Papers 184, University of Milano-Bicocca, Department of Economics, revised Apr 2010.
    5. Abdilahi Ali & Baris Alpaslan, 2017. "Is There an Investment Motive Behind Remittances? Evidence From Panel Cointegration," Journal of Developing Areas, Tennessee State University, College of Business, vol. 51(1), pages 63-82, January-M.
    6. Sadorsky, Perry, 2012. "Energy consumption, output and trade in South America," Energy Economics, Elsevier, vol. 34(2), pages 476-488.
    7. Nguyen, Kim Hanh & Kakinaka, Makoto, 2019. "Renewable energy consumption, carbon emissions, and development stages: Some evidence from panel cointegration analysis," Renewable Energy, Elsevier, vol. 132(C), pages 1049-1057.
    8. Mohammad Mafizur Rahman & Xuan-Binh (Benjamin) Vu & Son Nghiem, 2022. "Economic Growth in Six ASEAN Countries: Are Energy, Human Capital and Financial Development Playing Major Roles?," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    9. Dedeoğlu, Dinçer & Kaya, Hüseyin, 2013. "Energy use, exports, imports and GDP: New evidence from the OECD countries," Energy Policy, Elsevier, vol. 57(C), pages 469-476.
    10. Dogan, Eyup & Seker, Fahri, 2016. "Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy," Renewable Energy, Elsevier, vol. 94(C), pages 429-439.
    11. Donatella Baiardi & Carluccio Bianchi & Eleonora Lorenzini, 2014. "Food competition in world markets: Some evidence from a panel data analysis of top exporting countries," DEM Working Papers Series 083, University of Pavia, Department of Economics and Management.
    12. Sahbi FARHANI & Jaleleddine BEN REJEB, 2015. "Link between Economic Growth and Energy Consumption in Over 90 Countries," Working Papers 2015-614, Department of Research, Ipag Business School.
    13. Kahia, Montassar & Aïssa, Mohamed Safouane Ben & Lanouar, Charfeddine, 2017. "Renewable and non-renewable energy use - economic growth nexus: The case of MENA Net Oil Importing Countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 127-140.
    14. Kahia, Montassar & Ben Aïssa, Mohamed Safouane & Charfeddine, Lanouar, 2016. "Impact of renewable and non-renewable energy consumption on economic growth: New evidence from the MENA Net Oil Exporting Countries (NOECs)," Energy, Elsevier, vol. 116(P1), pages 102-115.
    15. Ogali, Oscar I.O. & Okoro, Emeka E. & Olafuyi, Saburi G., 2023. "Assessing consensus on nexus between natural gas consumption and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 187(C).
    16. Alexandra Tsiotras & Antonio Estache, 2014. "In the short run, energy efficiency concerns and trade protection hurt each other and growth, but in the long run, not necessarily so: 1980-2010 Latin American Evidence," Working Papers ECARES ECARES 2014-38, ULB -- Universite Libre de Bruxelles.
    17. Mathilde Aubry & Jean Bonnet & Patricia Renou-Maissant, 2015. "Entrepreneurship and the business cycle: the “Schumpeter” effect versus the “refugee” effect—a French appraisal based on regional data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 23-55, January.
    18. Hamit-Haggar, Mahamat, 2012. "Greenhouse gas emissions, energy consumption and economic growth: A panel cointegration analysis from Canadian industrial sector perspective," Energy Economics, Elsevier, vol. 34(1), pages 358-364.
    19. Jahanger, Atif & Hossain, Mohammad Razib & Usman, Muhammad & Chukwuma Onwe, Joshua, 2023. "Recent scenario and nexus between natural resource dependence, energy use and pollution cycles in BRICS region: Does the mediating role of human capital exist?," Resources Policy, Elsevier, vol. 81(C).
    20. Francisco García-Lillo & Eduardo Sánchez-García & Bartolomé Marco-Lajara & Pedro Seva-Larrosa, 2023. "Renewable Energies and Sustainable Development: A Bibliometric Overview," Energies, MDPI, vol. 16(3), pages 1-22, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:2:p:565-:d:133016. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.