Modeling the non-linear relationship between financial development and energy consumption: statistical experience from OECD countries

The linkage between financial development and energy consumption is widely investigated in the literature. However, the non-linear relationship between financial development and energy demand is still under debate. Therefore, this study aims to examine the non-linear relationship between financial d...

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Bibliographic Details
Published in:Environmental science and pollution research international 2019-03, Vol.26 (9), p.8838-8846
Main Authors: Baloch, Muhammad Awais, Danish, Meng, Fanchen
Format: Article
Language:English
Subjects:
Aquatic Pollution
Atmospheric Protection/Air Quality Control/Air Pollution
Earth and Environmental Science
Economic development
Economic growth
Economic models
Economics
Ecotoxicology
Energy consumption
Energy demand
Energy efficiency
Environment
Environmental Chemistry
Environmental Health
Environmental science
Regression models
Research Article
Statistical analysis
Waste Water Technology
Water Management
Water Pollution Control
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Summary:The linkage between financial development and energy consumption is widely investigated in the literature. However, the non-linear relationship between financial development and energy demand is still under debate. Therefore, this study aims to examine the non-linear relationship between financial development, economic growth, and energy consumption in OECD countries. The study uses the Driscoll–Kraay standard errors panel regression model for spanning from 1980 to 2016. The empirical findings indicate that an inverted U-shape relationship exists between financial development and energy consumption as well as between economic growth and energy consumption. Moreover, the feedback hypothesis is found between financial development and energy use. Additionally, income and energy use granger cause each other. The innovative findings contribute to extant literature, which is of special interest to the country’s policymakers regarding energy efficiency.
ISSN:0944-1344
1614-7499
DOI:10.1007/s11356-019-04317-9