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Avik Sinha
''Revisiting the growth-emission feedback mechanism: a note on contradicting results''
( 2019, Vol. 39 No.1 )
There is a plethora of studies on the causal association between economic growth, energy consumption, and carbon emissions, and Granger causality approach has been largely employed in those studies. Majority of these studies have employed annual data, which is low in terms of frequency. Therefore, there are unobserved shortcomings in those studies in terms of methodological selection for handling low frequency data, and this issue has never been addressed in the literature of energy and environmental economics. In this study, we are presenting an innovative approach for estimating the instantaneous feedback between the variables by employing Geweke causality approach. By highlighting the shortcomings of Granger causality approach, we have chosen the studies on growth-emission nexus carried out in Indian context, and we have applied Geweke causality analysis on the datasets used in those selected studies. Barring a few, our results have contradicted the findings of those studies in terms of the evidence of feedback hypothesis. We have also shown how the causality results should comply with the study context by comparing Granger and Geweke causality results.
Keywords: Feedback hypothesis, CO2, Granger causality, Geweke causality, India
JEL: Q5 - Environmental Economics: General
C5 - Econometric Modeling: General
Manuscript Received : Oct 03 2018 Manuscript Accepted : Mar 19 2019

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