On the Asymmetric Relationship Between Stock Market Development, Energy Efficiency and Environmental Quality: A Nonlinear Analysis

17 Pages Posted: 22 Mar 2021

See all articles by Stephane Goutte

Stephane Goutte

University Paris-Saclay, UMI Source, UVSQ

Khaled Guesmi

PSB Paris School of Business - Center of Research for Energy and Climate Change

Mayssa Mhadhbi

Université Paris-Saclay

Mohamed Gallali

affiliation not provided to SSRN

Date Written: March 20, 2021

Abstract


It has been widely documented in the literature that financial development drives up the impact of CO2 emissions through increases in real economic activities and the consumption of polluting fossil fuel energy. However, when dealing with stock market development, such upward effects on economic growth, energy efficiency, and carbon emissions seems to give away to a positive impact especially in emerging markets. This paper contributes to this debate by exploring both the symmetric and asymmetric responses of CO2 emission to changes in stock market development indicators. In particular, using both the panel linear and nonlinear ARDL, our results demonstrate the asymmetric effects of stock market development indicators on carbon emissions in the context of emerging markets. In particular, the long-run elasticities results suggest that positive and negative shocks on stock market indicator decreases environ- mental quality by increasing carbon emissions. Based on these empirical findings, this study offers some crucial policy implications

Keywords: Stock market development; Carbon emissions; Energy efficiency; Asymmetric relationship; NARDL model;

JEL Classification: Q43; G28; E44; F64

Suggested Citation

Goutte, Stephane and Guesmi, Khaled and Mhadhbi, Mayssa and Gallali, Mohamed, On the Asymmetric Relationship Between Stock Market Development, Energy Efficiency and Environmental Quality: A Nonlinear Analysis (March 20, 2021). Available at SSRN: https://ssrn.com/abstract=3808718 or http://dx.doi.org/10.2139/ssrn.3808718

Stephane Goutte (Contact Author)

University Paris-Saclay, UMI Source, UVSQ ( email )

47 Boulevard Vauban
Guyancourt, 78280
France

HOME PAGE: http://https://sites.google.com/site/mathgoutte/

Khaled Guesmi

PSB Paris School of Business - Center of Research for Energy and Climate Change ( email )

France

Mayssa Mhadhbi

Université Paris-Saclay ( email )

Mohamed Gallali

affiliation not provided to SSRN

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