Financial development and energy consumption in emerging markets: Smooth structural shifts and causal linkages

Date

2020-03-01

Author

Durusu-Ciftci, Dilek
Soytaş, Uğur
NAZLIOĞLU, ŞABAN

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

111
views

0
downloads

This study examines the dynamic interrelationships among financial development, energy consumption, and economic growth in emerging markets by focusing on accounting for structural changes in causal linkages. We first employ the Toda-Yamamoto causality framework and then augment it with a Fourier approximation which captures structural shifts as a gradual/smooth process. The empirical findings show that taking into account gradual structural shifts matters for the causal linkages between financial development and energy consumption. While the causality analysis which does not account for structural changes supports a causality between financial development and energy consumption only in 4 out of 21 emerging markets, the causality analysis with structural changes provides a causal linkage in half of the sample. This finding is consistent with the fact that emerging markets have experienced structural changes in either finance or energy sectors or both. We also conduct additional analyses which point out that cross-sectional dependency and the quantiles of the distribution matter for the causal linkages. Our results further shed light on the evidence that the economic activity mainly causes the financial development and energy consumption at the highest quantile of distribution in the fast-growing emerging economies.

Subject Keywords

General Energy, Economics and Econometrics

URI

https://hdl.handle.net/11511/42839

Journal

ENERGY ECONOMICS

DOI

https://doi.org/10.1016/j.eneco.2020.104729

Collections

Department of Business Administration, Article

Suggestions

OpenMETU
Core

Financial development and energy consumption in emerging markets: structural shifts in causal linkages Durusu Çiftçi, Dilek; Soytaş, Uğur; Nazlıoğlu, Şaban (null; 2018-11-03) This study examines dynamic causal interrelationships among financial development, energy consumption, and economic growth in the emerging markets by focusing on accounting for structural changes in causal linkages. We first employ the Toda-Yamamoto causality framework and later augment it with Fourier approximation to account for structural shifts – including gradual/smooth shifts. The empirical findings show that accounting for gradual structural shifts matter for the causal linkages between financial dev...
Nonlinear models, composite longer leading indicator and forecasts for UK real GDP Ocal, N (Informa UK Limited, 2006-05-20) This paper examines the role of the Office for National Statistics Composite Longer Leading Indicator, in nonlinear business cycle models for growth rates of UK real gross domestic product (GDP). These models are of the smooth transition regression class, with the transition between "regimes'' expressed as functions of lagged changes in the leading indicator. In general, evidence is found of business cycle regime asymmetries, with increases and decreases in the leading indicator implying distinct responses ...
Macroeconomic and institutional determinants of current account deficits Ozmen, E (Informa UK Limited, 2005-07-15) This study empirically investigates the effects of institutional and macroeconomic policy variables on current account deficits (CAD). Based on cross-section data for a broad number of countries, the results suggest that better governance increases whilst 'original sin' decreases the ability of an economy to sustain CAD. Exchange rate flexibility and openness appear to put a discipline on CAD. Consistent with the equity home bias and Feldstein-Horioka puzzle, CAD decrease with country size. The net impacts ...
Price and volatility linkages between international REITs and oil markets Nazlıoğlu, Şaban; Gupta, Rangan; Gormus, Alper; Soytaş, Uğur (Elsevier BV, 2020-05-01) This study analyzes price and volatility transmissions between nineteen real estate investment trusts (REITs) and the oil markets. The REITs data represents a variety of countries at different stages of their development and the expanded analytical approach includes accounting for structural shifts as gradual processes - as opposed to strictly abrupt processes typically assumed in the literature. Oil prices are found to primarily predict REITs prices in mature REITs markets, but the feedback from REITs to o...
Stock market development and low-carbon economy: The role of innovation and renewable energy Zeqiraj, Veton; Sohag, Kazi; Soytaş, Uğur (Elsevier BV, 2020-09-01) We examine the effect of stock market development (SMD) on the low-carbon economy (LCE). We consider two channels, renewable energy and technological innovation by which this affect occurs. We use the cross-sectional autoregressive distributed lags (CS-ARDL) approach to analyse panel time-series data over the period 1980-2016 for European Union member countries. We demonstrate that SMD impedes LCE in the long run. In contrast, technological innovation (TI) is found to be a driving factor in achieving LCE in...

Citation Formats

D. Durusu-Ciftci, U. Soytaş, and Ş. NAZLIOĞLU, “Financial development and energy consumption in emerging markets: Smooth structural shifts and causal linkages,” ENERGY ECONOMICS, pp. 0–0, 2020, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/42839.