The dynamic relationships among CO₂ emissions, renewable and non-renewable energy sources, and economic growth in India: evidence from time-varying Bayesian VAR model

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2019

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Kang, S.H.
Islam, F.
Kumar Tiwari, A.

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Structural Change and Economic Dynamics, 2019; 50:90-101

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Abstract

We apply a three-variable VAR model with probabilistic variability using a time-varying parametric approach to determine the dynamic interactions among GDP growth, energy use by renewable energy sources (RES, wind, solar, or hydro) and non-renewable energy sources (NRES, hydroelectric or coal) and CO₂ emission. Further, we characterize and quantify the impact of the nexus on the CO₂ emissions, energy sources (RES and NRES) vis-à-vis India’s economic growth and fluctuations during 1965Q1-2015Q4. We contribute to the literature by finding that stochastic volatility for RES and NRES appear to be U-shaped besides using TVP-VAR model to the Indian context. This U-shaped pattern seems to be related to economic growth. We also observe the time-varying patterns of the impact transmission mechanisms among energy sources, CO₂ emissions, and GDP. In addition, the impulse response of GDP from a positive shock to CO₂ varies with the type of energy use in different time horizons.

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Copyright 2019 Elsevier B.V. Access Condition Notes: Accepted manuscript available after 1 July 2021

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