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

2018-11-03
Durusu Çiftçi, Dilek
Soytaş, Uğur
Nazlıoğlu, Şaban
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 development and energy consumption. The causality analysis which does not account for structural changes supports a causal linkage between financial development and energy consumption only in four out of 20 emerging markets. The causality analysis with structural changes provides a causal linkage in half of the emerging markets. This finding is consistent with the fact that emerging markets have experienced structural changes in either finance or energy sectors or both.
Citation Formats
D. Durusu Çiftçi, U. Soytaş, and Ş. Nazlıoğlu, “Financial development and energy consumption in emerging markets: structural shifts in causal linkages,” Antalya, Türkiye, 2018, p. 2001, Accessed: 00, 2021. [Online]. Available: http://www.tek.org.tr/dosyalar/UEK-TEK_2018.pdf.