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Multivariate granger causality between CO2 Emissions, energy intensity, financial development and economic growth: evidence from Portugal

Muhammad, Shahbaz (2012): Multivariate granger causality between CO2 Emissions, energy intensity, financial development and economic growth: evidence from Portugal.

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Abstract

The present study aims to investigate the relationship between economic growth, energy intensity, financial development and CO2 emissions over the period of 1971-2009 in case of Portugal. The stationarity analysis is conducted by applying Zivot-Andrews unit root test and ARDL bounds testing approach for long run relationship between the variables. The direction of causal relationship between the series is examined by VECM Granger causality approach and robustness of causality analysis is tested by innovative accounting approach (IAA).

Our results confirmed that the variables are cointegrated for long run relationship. The empirical findings of this study reported that economic growth and energy intensity increase CO2 emissions, while financial development condenses it. The VECM causality analysis showed the feedback hypothesis between energy intensity and CO2 emissions, while economic growth and financial development Granger-cause CO2 emissions.

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