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A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon Emissions and Economic Growth to Energy Demand in UAE

Sbia, Rashid and Shahbaz, Muhammad and Hamdi, Helmi (2013): A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon Emissions and Economic Growth to Energy Demand in UAE.

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Abstract

This paper investigates the relationship between foreign direct investment, clean energy, trade openness, carbon emissions and economic growth in case of UAE covering the period of 1975Q1-2011Q4. We have tested the unit properties of variables in the presence of structural breaks. The ARDL bounds testing approach is applied to examine the cointegration by accommodating structural breaks stemming in the series. The VECM Granger causality approach is also applied to investigate the causal relationship between the variables. Our empirical findings confirm the existence of cointegration between the series. We find that foreign direct investment, trade openness and carbon emissions decline energy demand. Economic growth and clean energy has positive impact on energy consumption.

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