Open AccessDynamic Economic Analysis between Renewable Energy, Carbon Dioxide Emissions, Trade and GDP based on VECM Granger test and Wavelet Analysis
Author(s) -
Meili Liu,
Liwei Wang,
Chun-Te Lee,
Jeng-Eng Lin
Publication year - 2022
Publication title -
energy and environment research
Language(s) - English
Resource type - Journals
eISSN - 1927-0577
pISSN - 1927-0569
DOI - 10.5539/eer.v12n1p13
Subject(s) - granger causality , economics , econometrics , cointegration , renewable energy , johansen test , multicollinearity , real gross domestic product , energy consumption , macroeconomics , error correction model , regression analysis , mathematics , statistics , ecology , biology
In this study, we explored the dynamic economic relationship between Taiwan’s GDP growth, renewable energy consumption, foreign trade openness, and CO2 emissions from 1965 to 2016. Our analysis is based on using updated data to test the existence of Taiwan's EKC model and discuss the causal relationship between CO2 emissions and variables such as GDP growth, renewable energy consumption, and foreign trade opening. We used multicollinearity analysis to test the stationarity of the quadratic form of the EKC model, ADF and KPSS techniques, and Johansen and Juselius cointegration tests and found that there is a long-term equilibrium. By using VECM Granger causality test and wavelet coherence analysis, we further explored the causal relationship between CO2 emissions and other related variables, and found that there is a two-way causal relationship between carbon dioxide emissions and renewable energy consumption in the short term. In addition, from the wavelet correlation analysis of GDP growth and CO2 emissions, it can be seen that 1992 was a turning point in Taiwan’s economic development.