How do Energy Consumption, Environmental Degradation and Macroeconomic Performance Cause in Developing Countries? An Analysis

The purpose of study is to examine the long run association between energy consumption, environmental degradation and macroeconomic performance in selected developing countries. For this purpose, fifty developing countries are selected from 1990 to 2016. GDP and employment are taken as proxy variables of macroeconomic performance while energy consumption, environmental degradation, labor force, gross capital formation, manufacturing value added, personal remittances received are GDP deflators are other variables. Homogenous panel causality testing is used for explanation of causal and effect linkage of energy consumption, environmental degradation and macroeconomic variables in all selected developing countries after the cross-sectional dependence test and Pedroni test for panel cointegration. The results reveal that there is cross sectional dependency among all variables in selected developing countries. It indicates that the fluctuation in one country will be transmitted to other country which reflects the effectiveness of developing countries collaborative development strategy. Pedroni test for Co-integration and kao test identifies the long run relationship between economic energy consumption, environmental degradation and macroeconomic performance in selected developing countries.