The Economy-Energy-Environment Nexus in Imf’s Top 2 Biggest Economies: A Ty Approach

Abstract

This paper assesses the relationship between carbon emissions, economic growth and, energy consumption, in USA and China from the perspective of Granger causality, in a multivariate framework controlling for financial development, urbanization, and trade openness. Econometric techniques employed include unit root tests, Toda and Yamamoto Granger causality, and generalized impulse response and variance decomposition analysis for the time horizon 1980–2017. Test results indicate that governments of the USA and China cannot implement sturdier strategic energy policies in the long run without inhibiting the growth of the economy because of the bidirectional causative linkage between economic growth and energy use. A causal link does not exist between carbon emissions and financial development for both countries. Nevertheless, in the USA, there exists a unidirectional Granger causality controlling from energy consumption to financial development. In both economies, urbanization Granger causes CO2 emissions and energy use but the reverse does not hold. An upsurge in energy consumption and carbon emissions will lead to a surge in trade openness but not vice versa for China. A noteworthy result is that there is a substantiation of unidirectional causality from energy consumption to carbon emissions in both countries. In the USA, impulse response and variance decomposition analysis disclosed the effect of financial development is projected to have diminutive magnitude whiles in the future, energy use, economic growth, trade openness, and urbanization would influence carbon emissions significantly. The impacts of trade openness and financial development are expected to be of little importance in China. The general findings implied that urbanization, economic growth, and energy consumption influenced CO2 emissions significantly in the USA and China. Understanding these similar and contrasting situations is essential to reaching a global agreement on climate change affecting IMF’s top 2 biggest economies.

Global Trend of Carbon Emissions Based on Year: A Bibliographic Study

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Environmental taxes in ensuring national security: A structural optimization model

“…Strong transmission effects are confirmed between social behavior and environmental security (Ahmed et al, 2019;Holotová et al, 2020;Vafaei et al, 2019) as well as entrepreneurial sustainable policy, which creates new prospects to enhance environmental and national security (Alimuddin et al, 2020;Atkociuniene & Mikalauskiene, 2019;Nikodemska-Wołowik et al, 2019;Romana, 2020;Vasylieva et al, 2017). Studies of the relationship between different types of national security have shown that the closest interaction exists in the group "environmental-energy-economic security" (Atta Mills et al, 2020). Thus, energy and environmental security are connected through the structure of energy production (Jonek-Kowalska, 2019;Kolosok et al, 2020), development of alternative energies (Cebula et al, 2018;Prokopenko et al, 2017), sustainable and green investment (Pavlyk, 2020).…”

Setting up architecture for environmental tax system under certain socioeconomic conditions

“…Moreover, scientists also argued that environmental policy's main vectors are closely dependent on the country's energy security and priorities. Specifically, Atta Mills, Zeng, and Baafi (2020), based on the analysis of data on carbon emissions, economic growth and energy consumption in the USA and China in 1980-2017 using the Granger causality test, found out that in these two countries there is an inverse dependency between the scale of energy use and country economic development, while there is no statistically significant evidence of greenhouse gas emission on the economic welfare of both countries. Thus, we can underline that the priority vector of environmental policy for some developed economies is not highly connected to the air pollution, but to the environmental modernization of energy sector, responsible energy consumption, and expansion of renewable electricity production.…”