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Analysis on the nexus of economic growth, fossil fuel energy consumption, CO2 emissions and oil price in Africa based on a PMG panel ARDL approach

Mensah, Isaac Adjei, Sun, Mei, Gao, Cuixia, Omari-Sasu, Akoto Yaw, Zhu, Dongban, Ampimah, Benjamin Chris, Quarcoo, Alfred
Journal of cleaner production 2019 v.228 pp. 161-174
carbon, carbon dioxide, econometrics, economic development, energy, fossil fuels, greenhouse gas emissions, issues and policy, models, oils, prices, time series analysis, Africa
In this study, the causal link amid economic growth, fossil fuel energy consumption, carbon emissions and oil price was empirically tested from 1990 to 2015 by using a panel of 22 African countries. The sample of African countries was divided into two subgroups namely; Oil exporters and Non-oil exporters. Using the PMG panel ARDL and panel econometric methods, heterogeneity and cross-sectional dependence were considered to examine the long and short-term dynamic relationships as well as validity of a proposed model. Findings from the Pesaran-Yamagata homogeneity test, Pesaran CD test, CIPS and CADF panel unit root tests and Westerlund-Edgerton bootstrap panel cointegration indicated, the panel time series data has heterogeneity and cross-sectional dependence, analysed variables are stationary and cointegrated respectively. With respect to the PMG panel ARDL estimation method it was evidenced that there exist, (i) a bilateral causal link flanked by fossil fuel energy consumption and economic growth as well as fossil fuel energy consumption and carbon emissions in long and shot-terms for all panels, (ii) a unilateral causality from carbon emissions to economic growth in long-term and short-term for non-oil exporters nonetheless a bilateral causal relationship only in long-term for oil exporting countries, and (iii) a unilateral cause-and-effect link from oil prices to economic growth, energy consumption (fossil fuel) and carbon emission across all country groups in long and short-terms. Policy recommendations are further discussed.