Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria
To ensure sustainable development, it is crucial that the consumption of ecological resources remains within their productive capacity. This study aims to support policy formulation by examining the nexus between income, financial development, trade openness, and the ecological load capacity factor...
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| Format: | Article |
| Language: | English |
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Elsevier
2023-09-01
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| Series: | Heliyon |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2405844023067920 |
| _version_ | 1797669853279027200 |
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| author | Benedette Nneka Okezie Chinazaekpere Nwani Hilary Ikechukwu Nnam Perpetual Ijeoma Onuoha |
| author_facet | Benedette Nneka Okezie Chinazaekpere Nwani Hilary Ikechukwu Nnam Perpetual Ijeoma Onuoha |
| author_sort | Benedette Nneka Okezie |
| collection | DOAJ |
| description | To ensure sustainable development, it is crucial that the consumption of ecological resources remains within their productive capacity. This study aims to support policy formulation by examining the nexus between income, financial development, trade openness, and the ecological load capacity factor in Nigeria from 1970 to 2021. The results of the Bayer-Hanck and autoregressive distributed lag (ARDL) bounds cointegration tests indicate a long-run equilibrium relationship among the variables. Parameter estimations were conducted using the dynamic ordinary least squares (DOLS) and ARDL model estimators. Both the long-run and short-run results indicate that the ecological load capacity factor has a U-shaped curve with income, thereby validating the load capacity curve hypothesis in Nigeria. The estimated threshold turning points of the curve fall within Nigeria's current range of per capita GDP, which indicates that further increases in income will enhance ecological sustainability. Additionally, the ecological load capacity factor exhibits a negative relationship with financial development and trade openness in the long run. The Breitung-Candelon spectral Granger causality tests reveal that, in the long run, unidirectional causality runs from income and trade openness to the ecological load capacity factor, and bidirectional causality exists in the case of financial development. Furthermore, the tests indicate that none of the causal paths are significant for wavelength periods below four years. Therefore, the study recommends implementing medium-to long-term policy strategies to strengthen the ecological resilience base of the economy. |
| first_indexed | 2024-03-11T20:50:49Z |
| format | Article |
| id | doaj.art-9c0f06e73c0e434a8dc32b4f27768cb1 |
| institution | Directory Open Access Journal |
| issn | 2405-8440 |
| language | English |
| last_indexed | 2024-03-11T20:50:49Z |
| publishDate | 2023-09-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Heliyon |
| spelling | doaj.art-9c0f06e73c0e434a8dc32b4f27768cb12023-10-01T06:00:15ZengElsevierHeliyon2405-84402023-09-0199e19584Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from NigeriaBenedette Nneka Okezie0Chinazaekpere Nwani1Hilary Ikechukwu Nnam2Perpetual Ijeoma Onuoha3Accountancy Department, Alex Ekwueme Federal University, Ndufu-Alike, Ebonyi State, NigeriaDepartment of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike, Ebonyi State, Nigeria; Corresponding author.Accountancy Department, Alex Ekwueme Federal University, Ndufu-Alike, Ebonyi State, NigeriaAccountancy Department, Alex Ekwueme Federal University, Ndufu-Alike, Ebonyi State, NigeriaTo ensure sustainable development, it is crucial that the consumption of ecological resources remains within their productive capacity. This study aims to support policy formulation by examining the nexus between income, financial development, trade openness, and the ecological load capacity factor in Nigeria from 1970 to 2021. The results of the Bayer-Hanck and autoregressive distributed lag (ARDL) bounds cointegration tests indicate a long-run equilibrium relationship among the variables. Parameter estimations were conducted using the dynamic ordinary least squares (DOLS) and ARDL model estimators. Both the long-run and short-run results indicate that the ecological load capacity factor has a U-shaped curve with income, thereby validating the load capacity curve hypothesis in Nigeria. The estimated threshold turning points of the curve fall within Nigeria's current range of per capita GDP, which indicates that further increases in income will enhance ecological sustainability. Additionally, the ecological load capacity factor exhibits a negative relationship with financial development and trade openness in the long run. The Breitung-Candelon spectral Granger causality tests reveal that, in the long run, unidirectional causality runs from income and trade openness to the ecological load capacity factor, and bidirectional causality exists in the case of financial development. Furthermore, the tests indicate that none of the causal paths are significant for wavelength periods below four years. Therefore, the study recommends implementing medium-to long-term policy strategies to strengthen the ecological resilience base of the economy.http://www.sciencedirect.com/science/article/pii/S2405844023067920Ecological environmentLoad capacity factorFrequency domain causality testFinancial developmentTrade opennessper capita GDP |
| spellingShingle | Benedette Nneka Okezie Chinazaekpere Nwani Hilary Ikechukwu Nnam Perpetual Ijeoma Onuoha Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria Heliyon Ecological environment Load capacity factor Frequency domain causality test Financial development Trade openness per capita GDP |
| title | Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria |
| title_full | Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria |
| title_fullStr | Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria |
| title_full_unstemmed | Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria |
| title_short | Testing the income-finance-trade-environment nexus based on the ecological load capacity factor: Frequency-domain causality evidence from Nigeria |
| title_sort | testing the income finance trade environment nexus based on the ecological load capacity factor frequency domain causality evidence from nigeria |
| topic | Ecological environment Load capacity factor Frequency domain causality test Financial development Trade openness per capita GDP |
| url | http://www.sciencedirect.com/science/article/pii/S2405844023067920 |
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