The impact of government expenditure, renewable energy consumption, and CO2 emissions on Lebanese economic sustainability: ARDL approach
- Author(s)
-
DOIhttp://dx.doi.org/10.21511/ee.15(1).2024.16
-
Article InfoVolume 15 2024, Issue #1, pp. 217-227
- 254 Views
-
66 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Most of the recent environmental and economic studies focus on the influence of renewable energy consumption and effective government expenditure respecting global climate change in leading sustainable economic growth. The empirical studies showed variation in the relationship between these variables. Based on the Keynesian economic growth framework, this study aims to investigate the impact of government expenditure, renewable energy consumption, and carbon dioxide emissions on the sustainable economic growth of Lebanon. The study used the ordinary least square method to test the short- and long-run relationship between the model variables by employing the Autoregressive Distributed Lag Stationarity estimation. The research data are gathered from the World Development Indicators annually from 1990 to 2022. The empirical findings showed that all variables are stationary at first difference except for carbon dioxide emissions. A long-term relationship between the dependent and independent variables was shown by the model test simulation employing the bound test. The model test for model residuals showed no heteroscedasticity based on the White test. The residuals are normally distributed by applying the Shapiro-Wilk test, and the model is stable with no structural break at the period. According to the study results, government spending has a robust reverse relation with sustainable economic growth and positive significant results for both renewable energy consumption and carbon dioxide emissions. The study findings are consistent with some literature sources and raise attention to monitoring the nature of government spending and boosting green energy sources in an economy.
- Keywords
-
JEL Classification (Paper profile tab)E21, E61, E66, E42
-
References41
-
Tables8
-
Figures2
-
- Figure 1. Conceptual model
- Figure 2. Variation of variables with time (Gdp per capita, General government final consumption expenditure, CO2 emissions in kt, Renewable energy consumption)
-
- Table 1. Unit root tests on the individual series
- Table 2. Maximum number of lags
- Table 3. ARDL regression
- Table 4. ARDL long-run and short-run results
- Table 5. Bound test
- Table 6. Heteroscedasticity White’s test
- Table 7. Normality test
- Table 8. Cumulative sum test for parameter stability
-
- Acaravci, A., & Ozturk, I. (2010). On the relationship between energy consumption, CO2 emissions and economic growth in Europe. Energy, 35(12), 5412-5420.
- Alam, M. J., Begum, I. A., Buysse, J., & Huylenbroeck, G. V. (2012). Energy consumption, carbon emissions and economic growth nexus in Bangladesh: Co-integration and dynamic causality analysis. Energy Policy, 45, 217-225.
- Aller, C., Ductor, L., & Grechyna, D. (2021). Robust determinants of CO2 emissions. Energy Economics, 96, Article 105154.
- Aqeel, A., & Butt, M. S. (2001). The relationship between energy consumption and economic growth in Pakistan. Asia-Pacific Development Journal, 8(2), 101-110.
- Arouri, M. E. H., Youssef, A. B., M’henni, H., & Rault, C. (2012). Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy, 45, 342-349.
- Begum, R. A., Sohag, K., Abdullah, S. M. S., & Jaafar, M. (2015). CO2 emissions, energy consumption, economic and population growth in Malaysia. Renewable and Sustainable Energy Reviews, 41, 594-601.
- Cameron, A. C., & Trivedi, P. K. (2005). Microeconometrics: Methods and applications. Cambridge University Press.
- Chen, C., Pinar, M., & Stengos, T. (2020). Renewable energy consumption and economic growth nexus: Evidence from a threshold model. Energy Policy, 139, Article 111295.
- Chen, P.-Y., Chen, S.-T., Hsu, C.-S., & Chen, C.-C. (2016). Modeling the global relationships among economic growth, energy consumption and CO2 emissions. Renewable and Sustainable Energy Reviews, 65, 420-431.
- Chen, S.-T., Kou, H.-I., & Chen, C.-C. (2007). The relationship between GDP and electricity consumption in 10 Asian countries. Energy Policy, 35(4), 2611-2621.
- Chiawa, M. A., Torruam, J. T., & Abur, C. C. (2012). Cointegration and causality analysis of government expenditure and economic growth in Nigeria. International Journal of Scientific & Technology Research, 1(8), 165-174.
- Connolly, M., & Li, C. (2016). Government spending and economic growth in the OECD countries. Journal of Economic Policy Reform, 19(4), 386-395.
- Dagher, L., & Yacoubian, T. (2012). The causal relationship between energy consumption and economic growth in Lebanon. Energy Policy, 50, 795-801.
- Danladi, J. D., Akomolafe, K. J., Olarinde, O. S., & Anyadiegwu, N. L. (2015). Government expenditure and its implication for economic growth: Evidence from Nigeria. Journal of Economics and Sustainable Development, 6(18), 142-150.
- Ibrahim, O., Fardoun, F., Younes, R., & Louahlia-Gualous, H. (2013). Energy status in Lebanon and electricity generation reform plan based on cost and pollution optimization. Renewable and Sustainable Energy Reviews, 20, 255-278.
- IMF. (2023, June 29). Lebanon: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Lebanon (IMF Country Report No. 23/237).
- Ismail, M. A., & Yunus, M. M. (2012). Energy use, emissions, economic growth and trade: A Granger non-causality evidence for Malaysia (MPRA Paper No. 38473).
- Jiranyakul, K., & Brahmasrene, T. (2007). The relationship between government expenditure and economic growth in Thailand. Journal of Economics and Economics Education Research, 8(1), 93-102.
- Kinab, E., & Elkhoury, M. (2012). Renewable energy use in Lebanon: Barriers and solutions. Renewable and Sustainable Energy Reviews, 16(7), 4422-4431.
- Kripfganz, S., & Schneider, D. C. (2020). Response surface regressions for critical value bounds and approximate p-values in equilibrium correction models. Oxford Bulletin of Economics and Statistics, 82(6), 1456-1481.
- Liu, C.-H. L., Hsu, C. E., & Younis, M. Z. (2008). The association between government expenditure and economic growth: The Granger causality test of the US data, 1974–2002. Journal of Public Budgeting, Accounting & Financial Management, 20(4), 439-452.
- Loizides, J., & Vamvoukas, G. (2005). Government expenditure and economic growth: Evidence from trivariate causality testing. Journal of Applied Economics, 8(1), 125-152.
- Meltzer, A. H. (1981). Keyne’s general theory: A different perspective. Journal of Economic Literature, 19(1), 34-64.
- Narayan, P. K., & Narayan, S. (2010). Carbon dioxide emissions and economic growth: Panel data evidence from developing countries. Energy Policy, 38(1), 661-666.
- Narayan, P. K., Saboori, B., & Soleymani, A. (2016). Economic growth and carbon emissions. Economic Modelling, 53, 388-397.
- Nurlina, N. (2015). The effect of government expenditures on Indonesian growth. Journal of Economics, Business and Accountancy Ventura, 18(1), 1-14.
- Osabohien, R., Matthew, O., Aderounmu, B., & Olawande, T. (2018). Greenhouse gas emissions and crop production in West Africa: Examining the mitigating potential of social protection. International Journal of Energy Economics and Policy, 9(1), 57-66.
- Pao, H.-T., & Tsai, C.-M. (2010). CO2 emissions, energy consumption and economic growth in BRIC Countries. Energy Policy, 38(12), 7850-7860.
- Pedroni, P. (2004). Panel co-integration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20(3), 597-625.
- Pesaran, M. H., & Shin, Y. (1995). An autoregressive distributed lag modelling approach to co-integration analysis (Vol. 9514). Cambridge, UK: Department of Applied Economics, University of Cambridge.
- Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
- Raihan, A., Begum, R. A., Said, M. N. M., & Pereira, J. J. (2022). Relationship between economic growth, renewable energy use, technological innovation, and carbon emission toward achieving Malaysia’s Paris Agreement. Environment Systems and Decisions, 42, 586-607.
- Saboori, B., & Sulaiman, J. (2013). Environmental degradation, economic growth and energy consumption: Evidence of the environmental Kuznets curve in Malaysia. Energy Policy, 60, 892-905.
- Shapiro, S. S., & Wilk, M. B. (1965). An analysis of variance test for normality (complete samples). Biometrika, 52(3-4), 591-611.
- Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65-94.
- Soytas, U., Sari, R., & Ewing, B. T. (2007). Energy consumption, income, and carbon emissions in the United States. Ecological Economics, 62(3-4), 482-489.
- Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order integrated systems. Econometrica: Journal of the Econometric Society, 61(4), 783-820.
- Taher, H. (2017). Renewable energy consumption impact on the Lebanese economy. International Journal of Energy Economics and Policy, 7(4), 144-148.
- Taher, H. (2019). Climate change and economic growth in Lebanon. International Journal of Energy Economics and Policy, 9(5), 20-24.
- Yule, G. U. (1926). Why do we sometimes get nonsense-correlations between time-series? A study in sampling and the nature of time-series. Journal of the Royal Statistical Society, 89(1), 1-63.
- Zhang, D., Mohsin, M., Rasheed, A. K., Chang, Y., & Taghizadeh-Hesary, F. (2021). Public spending and green economic growth in BRI region: mediating role of green finance. Energy Policy, 153, 112256.
-
Persistence of fiscal deficits in Nigeria: examining the issues
Lawrence Uchenna Okoye
,
Alexander Ehimare Omankhanlen ,
Uchechukwu Emena Okorie ,
Johnson I. Okoh ,
Ado Ahmed
doi: http://dx.doi.org/10.21511/imfi.16(4).2019.09
Investment Management and Financial Innovations Volume 16, 2019 Issue #4 pp. 98-109 Views: 1365 Downloads: 273 TO CITE АНОТАЦІЯDue to a huge financing gap in many developing nations, governments use budget deficit to facilitate growth and development. However, deficit financing deepens the economic woes of these economies, leaving them in a vicious cycle of deficits. In Nigeria, for instance, fiscal deficits cause country’s bad performance and ranking both in global growth and development indicators. Thus, the use of fiscal deficit to enhance economic performance has proved to be futile and also has left bad economic consequences. Based on the econometric method of Autoregressive Distributed Lag, this study examines how selected macroeconomic indicators influence fiscal deficits in the budgetary policy of Nigeria. Historical data between 1981 and 2017 were used for the study. The study shows a significant positive effect of inflation, oil revenue, and lagged exchange rate on fiscal deficits. There is also evidence that external debt and current exchange rate decrease the level of fiscal deficits. However, the research did not prove robust evidence of fiscal deficit persistence. Government policy should target low level of inflation and exchange rate appreciation as well as the productive investment of oil revenues and economic diversification as the panacea for persistent use of fiscal deficits.
-
The causal and cointegration relationship between government revenue and government expenditure
Kebitsamang Anne Sere , Ireen Choga
doi: http://dx.doi.org/10.21511/pmf.06(3).2017.03
Public and Municipal Finance Volume 6, 2017 Issue #3 pp. 23-32 Views: 1134 Downloads: 194 TO CITE АНОТАЦІЯThis study determines the causal relationship that exists between government revenue and government expenditure in South Africa. The study employed annual time series data from the year 1980 to 2015 taken from the South African Reserve Bank. The Johansen multivariate method was employed to test for co-integration and for causality the Vector Error Correction/Granger causality test was employed. The empirical results suggest that there is a long-run relation-ship between government revenue and government expenditure. The causality result suggests that there is no causality between government revenue and government expenditure in South Africa. Thus, policy makers in the short run should determine government revenue and government expenditure of South Africa independently when reducing the budget deficit.
-
Determinants of fiscal policy behavior in Nigeria
Patrick Ologbenla
doi: http://dx.doi.org/10.21511/imfi.16(2).2019.01
Investment Management and Financial Innovations Volume 16, 2019 Issue #2 pp. 1-13 Views: 1025 Downloads: 126 TO CITE АНОТАЦІЯThe study investigated the factors that determine fiscal behavior in Nigeria. The vulnerability of fiscal policy framework in Nigeria to different shocks and the attendant effects on the behavior of fiscal policy are parts of the reasons that prompted this research work. Annual data between 1980 and 2015 on core fiscal variables such as government revenue, government expenditure, fiscal balance, public debt, as well as other variables such as oil price, exchange rate, and inflation rate commodity price among others, are used. The Auto-Regressive Distributed Lag ARDL estimating technique is used to analyze both the long-run and short-run effects of these variables on fiscal behavior in Nigeria. Findings from the study show that fiscal policy in Nigeria is highly vulnerable to shocks from these variables mostly in the short run. Notwithstanding, variables like government revenue, government expenditure, regime of administration, oil price and commodity price volatilities all have sustained effects till the long-run periods. It was discovered that oil price movements is not the only external factor that has pronounced effects on fiscal behavior, but commodity prices volatility generally constitutes an important influential factor in determination of fiscal policy behavior in Nigeria.
