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The Nexus between Renewable Energy, Economic Growth, and Carbon Dioxide Emissions: Evidence from MS-VAR and MS-Granger Causality Methods

Authors :
Ayça Büyükyılmaz Ercan
Metehan Ercan
Source :
Ekonomi, Politika & Finans Araştırmaları Dergisi, Vol 9, Iss 4, Pp 678-699 (2024)
Publication Year :
2024
Publisher :
Ekonomi ve Finansal Araştırmalar Derneği, 2024.

Abstract

This study aims to examine the dynamic relationship between carbon dioxide (CO2) emissions, renewable energy consumption, and economic growth in Denmark, Sweden, and Chile. These countries were not randomly selected. They were chosen since they have the highest scores according to the Climate Change Performance Index (2023). In addition, Markov-switching vector autoregressive (MS-VAR) and Markov-switching Granger (MS-Granger) causality methods are applied to the annual data of the three countries over the period 1971–2021. Contrary to linear methods, MS-VAR and MS-Granger causality approaches allow us to estimate and interpret this relationship for different regimes, such as recession and expansion. These methods also provide insights into the likelihood and duration of the persistence of the current economic regime. The empirical results show that there is a two-way MS-Granger causality between renewable energy consumption and economic growth in all regimes for the three countries except for moderate and high expansion regimes for Chile. Moreover, in general, there is a two-way MS-Granger causality between economic growth and CO2 emissions in all regimes. Furthermore, the findings from the estimated models indicate that there is a two-way MS-Granger causality between renewable energy consumption and CO2 emissions in general, except for the second regime for Chile.

Details

Language :
English, Turkish
ISSN :
2587151X
Volume :
9
Issue :
4
Database :
Directory of Open Access Journals
Journal :
Ekonomi, Politika & Finans Araştırmaları Dergisi
Publication Type :
Academic Journal
Accession number :
edsdoj.25328c74e67c40349acea974f5b338b9
Document Type :
article
Full Text :
https://doi.org/10.30784/epfad.1514985