Invading the dynamics of economic growth and CO2 emission: panel data error correction model (ECM) approach

High-frequency monitoring of China's green growth-at-risk

With industrialization and urbanization, China faces enormous challenges from energy security and environmental issues. To address these challenges, it is imperative to establish a green accounting system for economic growth and to measure the uncertainty of China's green GDP (GGDP) growth from a risk management perspective. With this in mind, we follow the idea of growth-at-risk (GaR) to propose the concept of green GaR (GGaR) and extend it to the mixed-frequency data environment. Specifically, we first measure China's annual GGDP using the System of Environmental Economic Accounting (SEEA), then construct China's monthly green financial index by a mixed-frequency dynamic factor model (MF-DFM), and finally monitor China's GGaR from 2008M1 to 2021M12 with the mixed data sampling-quantile regression (MIDAS-QR) method. The main findings are as follows: First, the proportion of China's GGDP to traditional GDP gradually increases from 81.97% in 2008 to 89.34% in 2021, which illustrates that the negative environmental externalities caused by China's economic growth are gradually decreasing. Second, the high-frequency GGaR has favorable predictive performance and is significantly superior to the common-frequency GGaR at most quantiles. Third, the high-frequency GGaR has good nowcasting performance, and its 90% and 95% confidence intervals include true value for all prediction horizons. Furthermore, it can provide early warning of economic downturns through probability density prediction. Overall, our main contribution lies in constructing a quantitative assessment and high-frequency monitoring of China's GGDP growth risk, which provides an effective tool for investors and companies to predict risk, and a reference for the Chinese government to better formulate sustainable development strategies.

Does excessive energy utilization and expansion of urbanization increase carbon dioxide emission in Belt and Road economies?

The phenomenal increase in global temperature and variation in climate change are the replications of nature, alarming governments to limit the emissions of greenhouse gases (GHGs) and adopt green innovation and environmental-friendly clean and green technologies. In this paper, we empirically investigate whether there are any changes in excessive consumption of energy from conventional sources, expansion of urbanization, carbon dioxide (CO₂) emissions, and economic growth in six different regions, namely, East Asia (EA), South Asia (SA), Southeast Asia (SEA), Central Asia (CA), Eastern Europe (EE), and the Middle East and North Africa (MENA), under the Belt and Road Initiatives of panel data over the period of 1985 to 2017. The empirical methods include a panel co-integration check, heterogeneity test, panel Granger causality test, pooled mean group (PMG), and augmented mean group (AMG). To verify the outcomes, robustness tests were carried out using the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) approaches. Our results confirm that CO₂ emissions are primarily influenced by excessive utilization of conventional energy, economic growth, and expansion of urbanization. The findings confirm the co-integrating relationships among the variables in all six regions. Moreover, the panel causality analysis identified a bidirectional causal relationship between energy consumption, economic growth, urbanization, and CO₂ emissions. While these results can play an instrumental role in formulating CO₂ emission policies among our selected countries, our research can also assist policymakers and governments in other developing countries implement important policy initiatives. In this regard, the findings suggest that the current environment-related polices of Belt and Road Initiatives (BRI) do not efficiently tackle CO₂ emissions. In order to achieve the CO₂ emission degradation objective, the Belt and Road countries should restructure their environment-related policies by limiting the consumption of conventional energy and expansion of urbanization. The adaptation and establishment of such a panoramic policy program can assist emerging economies to acquire consolidated and environmentally sustainable economic growth.