Testing dependence patterns of energy consumption with economic expansion and trade openness through wavelet transformed coherence in top energy-consuming countries

Article


ul Husnain, Muhammad Iftikhar, Nasrullah and Khan, Muhammad Aamir. 2021. "Testing dependence patterns of energy consumption with economic expansion and trade openness through wavelet transformed coherence in top energy-consuming countries." Environmental Science and Pollution Research. 28 (36), pp. 49788-49807. https://doi.org/10.1007/s11356-021-14046-7
Article Title

Testing dependence patterns of energy consumption with economic expansion and trade openness through wavelet transformed coherence in top energy-consuming countries

ERA Journal ID5827
Article CategoryArticle
Authorsul Husnain, Muhammad Iftikhar, Nasrullah and Khan, Muhammad Aamir
Journal TitleEnvironmental Science and Pollution Research
Journal Citation28 (36), pp. 49788-49807
Number of Pages20
YearSep 2021
PublisherSpringer
Place of PublicationGermany
ISSN0944-1344
1614-7499
Digital Object Identifier (DOI)https://doi.org/10.1007/s11356-021-14046-7
Web Address (URL)https://link.springer.com/article/10.1007/s11356-021-14046-7
Abstract

Economic growth and trade openness are closely linked with energy consumption and hence have environmental consequences. Many studies have investigated the relationship between these variables. Two weaknesses in empirical literature on energy-growth nexus are prominent. First majority of the studies are conducted on different groups of countries; however, no study has focused the top energy-consuming countries despite their immense importance in the context of energy-growth nexus. Second, this literature cannot simultaneously capture time and frequency domains, short- and long-run dependence, and lagging and leading effects among the variables. Furthermore, environmental impacts of increased energy consumption emerging from trade base economic growth are less studied. This study employs wavelet transformed coherence method to examine dependence partners of energy consumption with economic expansion and trade openness in top 10 energy-consuming countries. This methodology avoids the unrealistic assumption of stationarity of the variables due to favorable scaling tool and unveils the time frequency dependence among variables with more reliability as it accounts for the seasonality, cycles, or trends extracted from the transformation change over time. Furthermore, this technique has the novelty to handle data when its transformation from one-dimensional to bi-dimensional time-frequency sphere is allowed. Findings reveal a positive influence of economic growth and trade on energy consumption in many countries. The wavelet transformed coherence indicates short-run coherence among energy consumption and economic growth of all the top 10 energy-consuming countries. Long-run dependence among energy consumption and economic growth exists in case of China, India, Brazil, and South Korea with mostly leading role of energy consumption over economic growth. The findings of the study reiterate the importance of energy consumption in the development of these economies and suggest that energy policies aimed at improving efficiency in the production and consumption of energy will not hurt economic growth.

KeywordsEnergy; Growth; Wavelet; Efficiency; Frequency; Consumption
ANZSRC Field of Research 20204105. Pollution and contamination
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COMSATS University Islamabad, Pakistan
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