Natural gas consumption, economic growth and carbon emissions :evidence from panel data for MENA region -

Abstract

Energy in general is an important component in economic growth. Specifically, natural gas plays a key role for economic development. Thus, several studies have investigated the link between natural gas consumption (NGC), economic growth (GDP) and carbon dioxide (CO2) emissions. This paper employs the panel unit root tests, panel cointegration methods and panel causality test to examine the direction of causality between NGC, GDP and CO2 emissions for 10 MENA countries covering the annual period 1980-2011. The finding of this study shows that there is no causal relationship between any of the variables in the short run. However, in the long run, there is a unidirectional causality running from NGC and CO2 emissions to GDP. Besides, to deal with heterogeneity in different economies and with endogeneity bias in the regressors, this study uses both the FMOLS and DOLS estimation techniques to confirm the long run relationship between the relevant variables.