Malaysia’s Energy-Growth Nexus and Environmental Kuznets Curve Hypothesis: Empirical Analysis Using the VECM and ARDL Cointegration Techniques

Authors

  • Takashi Fukuda Independent researcher

DOI:

https://doi.org/10.52941/jad.v8i1.22

Keywords:

Energy-growth nexus, Environmental Kuznets curve (EKC), Globalization, Structural break, VECM, ARDL, Granger Causality, Malaysia

Abstract

This paper investigated Malaysia’s energy-growth nexus and environmental Kuznets curve (EKC) hypothesis over the period 1971-2014 by taking the globalization variables of trade openness and foreign direct investment (FDI) and the structural break dummy of the Asian financial crisis of 1997 into estimation. To give interference, the Granger causality tests were implemented in the framework of two cointegration techniques: vector error correction model (VECM) and autoregressive distributed lag (ARDL). As per Malaysia’s energy-growth nexus, referring to different results of the two approaches, we concluded that the presence of the energy-growth nexus was statistically confirmed, but it has not been fully established yet in the country. On the other hand, both the VECM and ARDL results provided the same conclusion for Malaysia’s EKC hypothesis, that is, in the initial stage, as the higher economic growth, the less CO2 emissions, but after a threshold, the higher economic growth, the more CO2 emissions.

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Published

2021-11-16

How to Cite

Fukuda, T. (2021). Malaysia’s Energy-Growth Nexus and Environmental Kuznets Curve Hypothesis: Empirical Analysis Using the VECM and ARDL Cointegration Techniques. Journal of Asian Development, 8(1), 1–27. https://doi.org/10.52941/jad.v8i1.22