foreign direct investment in turkey regional determinants the uneven regional distribution of foreign direct investment fdi in turkey poses an interesting question from the perspective of multinational firms mnfs and policy makers alike this paper focuses on the factors governing the location decisions of mnfs within turkey with specific reference to policy implications using a conditional logit model it is found that agglomeration depth of local financial markets human capital and coastal access dominate location decisions for the aggregate sample of foreign investors in turkey this study reveals no evidence that public investment is successful in attracting mnfs to particular regions also importantly the location determinants vary dramatically by broad industrial category investment composition and origin country characteristics including income category and region

a panel cointegration analysis of the demand for oil in the middle east this article applies recently developed panel unit root and panel cointegration techniques to estimate the long run income and price elasticities for oil in the middle east the results for the panel indicate that demand for oil is highly price inelastic and slightly income elastic in the middle east there is considerable variation in the results for the income variable across countries with the coefficient on the income variable statistically insignificant for several countries the coefficient on the price variable is statistically significant in all cases with the expected sign and the price elasticity is uniformly low while the results for the income variable differ across countries the results for the panel as a whole suggest that the demand for oil in the middle east is being driven largely by strong economic growth while consumers are largely insensitive to price changes

efficient resource allocation on the basis of priorities many institutions allocate resources by non market mechanisms based on priorities in this paper we introduce a model of resource allocation on the basis of priorities and address the following questions is it possible to allocate resources on the basis of any priority structure if yes when can we do this pareto efficiently without creating incentives for manipulation and consistently across different groups of agents and resource levels we adopt a basic indivisible objects model with a finite number of object types and a finite quota of goods of each type some interesting examples are the determination of access to education allocation of graduate houses offices or tasks agents are assumed to have strict preferences over object types and remaining unassigned an assignment is an allocation of the objects to the agents such that every agent receives at most one object a rule associates an assignment to each preference profile we formalize a priority structure to be a collection of strict priority rankings of individuals indexed by the object types where i a j would be read as i has higher priority for object a than j we assume that the priority structure is exogenously fixed and allow the preferences of the agents to vary a rule is said to violate a priority of i for a if there is a preference profile under which i envies j who is assigned a and publication information econometrica 70 6 november 2002 2489 2497 the copyright to this article is held by the econometric society http www econometricsociety org it may be downloaded printed and reproduced only for personal or classroom use absolutely no downloading or copying may be done for or on behalf of any for profit commercial firm or other commercial purpose without the explicit permission of the econometric society for this purpose contact julie p gordon executive director of the society at jpg northwestern edu i would like to thank faruk gul wolfgang pesendorfer the co editor the four anonymous referees and the participants of the micro theory lunch seminar in princeton university for their comments and suggestions

on two competing mechanisms for priority based allocation problems we consider the priority based allocation problem there is a set of indivisible objects with multiple supplies e g schools with seats and a set of agents e g students with priorities over objects e g proximity of residence area we study two well known and competing mechanisms the agentoptimal stable mechanism aosm allots objects via the deferred acceptance algorithm the top trading cycles mechanism ttcm allots objects via gale s top trading cycles algorithm we show that the two mechanisms are equivalent or ttcm is fair i e respects agents priorities or resource monotonic o rpopulation monotonic if and only if the priority structure is acyclic furthermore if aosm fails to be efficient consistent for a problem ttcm also fails to be fair consistent for it however the converse is not necessarily true

vertical targeting and leakage in carbon policy in this paper we examine the intersection between two important aspects of climate policy design the first is the point of regulation should it be placed on pollution sources carbon rich inputs or consumers this issue of upstream versus downstream regulation is one that we will refer to as vertical targeting the second aspect concerns the external effects of a local climate policy leakage occurs when par tial regulation results in an increase in emissions in unregulated parts of the economy this paper examines how regulators choice of upstream versus downstream environmental regulation affects emissions in other countries with lax environmental regulation these two elements of climate policy are closely related in many contexts the selection of the point of regulation in the vertical chain is influenced if not driven by concerns over extrajurisdictional impacts given the global nature of the pollutant regulators in any specific jurisdiction need to be mindful of how local limits will effect global emissions regions imposing greenhouse gas restrictions may consume more than they produce of carbon intensive goods such as gasoline or cement in such cases regulations imposed on consumers can reach upstream to producers located outside the regulated areas for example by raising the cost of consuming carbon intensive electricity in california regulators in that state hope to reduce the combustion of coal in other regions of the western united states it is important to recognize that vertical tar geting is but one mechanism through which regulators can combat leakage much academic research and legislation has focused on the legal and economic merits of border adjustments such as import tariffs based on carbon content

is there a turning point in the relationship between income and energy use and or carbon emissions abstract we analyze the effect of fuel mix model specification and the level of development on the presence and size of a turning point in the relationship between income and energy use and or carbon emissions the results indicate that fuel mix the specification for income and the level of economic development affect conclusions about whether there is a turning point in the relationship between economic activity and energy use and carbon emissions including fuel shares generally reduces the size of a turning point that is estimated from a panel that includes observations from both oecd and non oecd nations but this result varies according to the level of development for oecd nations there is limited support for a turning point in the relationship between income and per capita energy use and or carbon emissions for non oecd nations there is no turning point in the relationship between income and either energy use or carbon emissions instead the relationship is positive together the results indicate that forecasters and policy makers should not depend on a turning point in the relationship between income and energy use or carbon emissions to reduce either

on stable and strategy proof rules in matching markets with contracts abstract this paper studies stable and one sided strategy proof rules in many to one matching markets with contracts not assuming any kind of substitutes condition or the law of aggregate demand we obtain the following results first the number of stable and strategy proof rules is at most one second the doctor optimal stable rule whenever it exists is the unique candidate for a stable and strategy proof rule third a stable and strategy proof rule whenever it exists is second best optimal for doctor welfare in that no individually rational and strategy proof rule can dominate it this last result is further generalized to non wasteful and strategy proof rules due to the weak assumptions our analysis covers a broad range of markets including cases where a unique stable and strategy proof rule is not equal to the one induced by the cumulative offer process or the deferred acceptance algorithm

carbon footprint taxes we analyze whether a carbon consumption tax is logistically feasible we consider a carbon footprint tax cft which would be modeled after a credit method value added tax the basis for the tax would be a product s carbon footprint which includes all of the emissions released during production of the good and its inputs as well as any greenhouse gases latent in the product our analysis suggests that a pure cft requiring the calculation of the carbon footprint of every individual product may be prohibitively costly however a hybrid cft seems economically feasible the hybrid cft would give firms the option to either calculate the carbon footprint of their outputs and have their products taxed based on those footprints or use product class specific default carbon footprints as the tax basis thereby saving on calculation costs because the cft would be levied on all goods consumed domestically the cft would keep domestic firms on an even footing with those producing in countries without active climate policy protecting competitiveness and reducing leakage

upstream vs downstream co2 trading a comparison for the electricity context in electricity downstream co2 regulation requires retail suppliers to buy energy from a mix of sources so that their weighted emissions satisfy a standard it has been argued that such load based regulation would solve emissions leakage cost consumers less and provide more incentive for energy efficiency than traditional source based cap and trade programs because pure load based trading complicates spot power markets variants geac and co2rc that separate emissions attributes from energy have been proposed when all generators and consumers come under such a system these load based programs are equivalent to source based trading in which emissions allowances are allocated by various rules and have no necessary cost advantage the geac and co2rc systems are equivalent to giving allowances free to generators and requiring consumers either to subsidize generation or buy back excess allowances respectively as avoided energy costs under source based and pure load based trading are equal the latter provides no additional incentive for energy efficiency the speculative benefits of load based systems are unjustified in light of their additional administrative complexity and cost the threat that they pose to the competitiveness and efficiency of electricity spot markets and the complications that would arise when transition to a federal cap and trade system occurs

testing the moderating role of financial development in an environmental kuznets curve empirical evidence from turkey abstract employing second generation econometric procedures that consider multiple structural breaks in the series this article examines turkey as a case study in the investigation of the moderating role of financial development in a conventional environmental kuznets curve ekc the study uses two separate models for this purpose 1 the main effects model and 2 the interaction effects model the results of this investigation suggest a long term equilibrium relationship between financial development and the ekc in turkey using both model options financial development has been found to moderate the effect of real output on carbon dioxide emissions in the shorter periods negatively which signifies successful environmental performance and energy management in comparison financial development moderates the effect of real output on carbon dioxide emissions in the longer periods positively and in which this finding again signifies that policies for energy savings and green house targets need to be established to target longer periods and energy management policies at higher levels of economic activity the present study did not confirm a significant moderating effect of financial development on the impact of energy consumption on carbon dioxide emissions in the case of turkey

energy caps alternative climate policy instruments for china abstract decoupling fossil energy demand from economic growth is crucial for china s sustainable development especially for addressing severe local air pollution and global climate change an absolute cap on coal or fossil fuel consumption has been proposed as a means to support the country s energy and climate policy objectives we evaluate potential energy cap designs that differ in terms of target fuel point of control and national versus regional allowance trading using a global numerical general equilibrium model that separately represents 30 provinces in china first we simulate a coal cap and find that relative to a cap on all fossil fuels it is significantly more costly and results in high localized welfare losses second we compare fossil energy cap designs and find that a national cap on downstream fossil energy use with allowance trading across provinces is the most cost effective third we find that a national fossil energy cap with trading is nearly as cost effective as a national co2 emissions trading system that penalizes energy use based on carbon content as a fossil energy cap builds on existing institutions in china it offers a viable intermediate step toward a full fledged co2 emissions trading system

a dynamic school choice model this paper inspires from a real life assignment problem faced by the mexican ministry of public education we introduce a dynamic school choice problem that consists in assigning positions to overlapping generations of teachers from one period to another teachers can either retain their current positions or choose a preferred one in this framework a solution concept that conciliates the fairness criteria with the individual rationality condition is introduced it is then proved that a solution always exists and that it can be reached by a modified version of the deferred acceptance algorithm of gale and shapley we also show that the mechanism is dynamically strategy proof and respects improvements whenever the set of orders is lexicographic by tenure

energy and economic growth in the usa a multivariate approach abstract this paper examines the causal relationship between gdp and energy use for the period 1947 90 in the usa the relationship between energy use and economic growth has been examined by both biophysical and neoclassical economists in particular several studies have tested for the presence of a causal relationship in the granger sense between energy use and economic growth however these tests do not allow a direct test of the relative explanatory powers of the neoclassical and biophysical models a multivariate adaptation of the test vector autoregression var does allow such a test a var of gdp energy use capital stock and employment is estimated and granger tests for causal relationships between the variables are carried out although there is no evidence that gross energy use granger causes gdp a measure of final energy use adjusted for changing fuel composition does granger cause gdp

the impact of growth energy and financial development on the environment in china a cointegration analysis this article aims to investigate the impact of financial development economic growth and energy consumption on environmental pollution in china from 1953 to 2006 using the autoregressive distributed lag ardl bounds testing procedure the main objective is to examine the long run equilibrium relationship between financial development and environmental pollution the results of the analysis reveal a negative sign for the coefficient of financial development suggesting that financial development in china has not taken place at the expense of environmental pollution on the contrary it is found that financial development has led to a decrease in environmental pollution it is concluded that carbon emissions are mainly determined by income energy consumption and trade openness in the long run moreover the findings confirm the existence of an environmental kuznets curve in the case of china

strategyproof assignment by hierarchical exchange we give a characterization of the set of group strategyproof pareto optimal and reallocation proof allocation rules for the assignment problem where individuals are assigned at most one indivisible object without any medium of exchange although there are no property rights in the model the rules satisfying the above criteria imitate a trading procedure with individual endowments in which individuals exchange objects from their hierarchically determined endowment sets in an iterative manner in particular these assignment rules generalize gale s top trading cycle procedure the classical rule for the model in which each individual owns an indivisible good

financial development and economic growth abstract this paper examines the empirical relationship between long run growth and financial development proxied by the ratio between bank credit to the private sector and gdp we find that this proxy is positively correlated with growth in a large cross country sample but its impact changes across countries and is negative in a panel data for latin america we argue that the latter findings is the result of financial liberalization in a poor regulatory environment our findings also show that the main channel of transmission from financial development to growth is the efficiency rather than the volume of investment

participation in gvcs and co2 emissions abstract this paper attempts to explore the determinants of co2 emissions in the context of international trade while there exist studies that examine the roles of horizontal specialization and inter industry trade transactions little previous research attention has been paid to the roles of vertical specialization and intra industry trade transactions in affecting co2 emissions to fill the knowledge gap this study uses the panel data of 62 countries and regions for the period of 1995 2011 to estimate the effect of participation in global value chains gvcs on per capita co2 emissions major findings include 1 the relationship between participation degrees in gvcs and per capita co2 emissions is found to be inversely u shaped at the aggregate economy level and for most individual industries 2 per capita gdp shows an n shaped relationship with per capita co2 emissions and 3 benign drivers of co2 emissions include r d energy conservation and population control it can be concluded that countries with low gdp or gvc participation degrees are expected to experience worsening co2 emissions in the short or even medium run this trend however can be moderated or even reversed with more r d investments

causality between income and emission a country group specific econometric analysis abstract empirical studies of the environmental kuznets curve ekc examine the presence or otherwise of an inverted u shaped relationship between the level of pollution and the level of income customarily in the diagram of ekc the level of income is shown on the horizontal axis and that of pollution on the vertical axis thus it is presumed that the relationship between income and pollution is one of unidirectional causality with income causing environmental changes and not vice versa the validity of this presumption is now being questioned it is being asserted that the nature and direction of causality may vary from one country to the other in this paper we present the results of a study of income co 2 emission causality based on a granger causality test to cross country panel data on per capita income and the corresponding per capita co 2 emission data briefly our results indicate three different types of causality relationship holding for different country groups for the developed country groups of north america and western europe and also for eastern europe the causality is found to run from emission to income for the country groups of central and south america oceania and japan causality from income to emission is obtained finally for the country groups of asia and africa the causality is found to be bi directional the regression equations estimated as part of the granger causality test further suggest that for the country groups of north america and western europe the growth rate of emission has become stationary around a zero mean and a shock in the growth rate of emission tends to generate a corresponding shock in the growth rate of income in contrast for the country groups of central and south america oceania and japan a shock in the income growth rate is likely to result in a corresponding shock in the growth rate of emission finally causality being bi directional for the country groups of asia and africa the income and the emission growth rates seemed to reinforce each other

economic growth energy consumption financial development international trade and co2 emissions in indonesia this study examines the linkages among economic growth energy consumption financial development trade openness and co2 emissions over the period of 1975q1 2011q4 in the case of indonesia the stationary analysis is performed by using zivot andrews structural break unit root test and the ardl bounds testing approach for a long run relationship between the series in the presence of structural breaks the causal relation between the concerned variable is examined by the vecm granger causality technique and robustness of causal analysis is tested by innovative accounting approach iaa our results confirm that the variables are cointegrated it means that the long run relationship exists in the presence of structural break stemming in the series the empirical findings indicate that economic growth and energy consumption increases co2 emissions while financial development and trade openness compact it the vecm causality analysis has shown the feedback hypothesis between energy consumption and co2 emissions economic growth and co2 emissions are also interrelated i e bidirectional causality financial development granger causes co2 emissions the study opens up a new policy insights to control the environment from degradation by using energy efficient technologies financial development and trade openness can also play their role in improving the environmental quality

addressing global environmental externalities transaction costs considerations is there a way to understand why some global environmental externalities are addressed effectively whereas others are not the transaction costs of defining the property rights to mitigation benefits and costs is a useful framework for such analysis this approach views international cooperation as a contractual process among country leaders to assign those property rights leaders cooperate when it serves domestic interests to do so the demand for property rights comes from those who value and stand to gain from multilateral action property rights are supplied by international agreements that specify resource access and use assign costs and benefits including outlining the size and duration of compensating transfer payments and determining who will pay and who will receive them four factors raise the transaction costs of assigning property rights i scientific uncertainty regarding mitigation benefits and costs ii varying preferences and perceptions across heterogeneous populations iii asymmetric information and iv the extent of compliance and new entry these factors are used to examine the role of transaction costs in the establishment and allocation of property rights to provide globally valued national parks implement the convention on the international trade in endangered species of wild fauna and flora execute the montreal protocol to manage emissions that damage the stratospheric ozone layer set limits on harvest of highly migratory ocean fish stocks and control greenhouse gas emissions jel d23 p14 q22 q51 q54 q58

the bounds test approach for cointegration and causality between financial development international trade and economic growth the case of cyprus this study employs the bounds test for co integration and granger causality tests to investigate the long run equilibrium relationship and the direction of causality between financial development international trade and real income growth for the cyprus economy the results of the study reveal that financial development as measured by broad money m2 international trade and real income growth are cointegrated thus a long run equilibrium relationship can be inferred among these three variables on the other hand granger causality test results suggest that in cyprus the growth in real income stimulates the growth of international trade both exports and imports and the growth of money supply furthermore growth in imports of goods and services also stimulates a growth in exports of goods and services of cyprus although this result contradicts our initial expectations it indicates the importance of capital inflows in cyprus that plays a major role in financing the investments mainly in the tourism

voting by committees under constraints we consider social choice problems where a society must choose a subset from a set of objects specifically we characterize the families of strategy proof voting procedures when not all possible subsets of objects are feasible and voters preferences are separable or additively representable

comparing policies to combat emissions leakage border carbon adjustments versus rebates we explore conditions determining which anti leakage policies might be more effective complements to domestic greenhouse gas emissions regulation we consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness a border charge on imports a border rebate for exports full border adjustment and domestic output based rebating each option faces different potential legal hurdles in international trade law each also has different economic impacts while all can support competitiveness none is necessarily effective at reducing global emissions nor is it possible to rank order the options effectiveness depends on the relative emissions rates elasticities of substitution and consumption volumes we illustrate these results with simulations for the energy intensive sectors of three different economies the united states canada and europe although most controversial full border adjustment is usually most effective but output based rebating for key manufacturing sectors can achieve many of the gains

on the operation of multiple matching markets abstract we provide a new perspective on how to operate matching markets when there are many types of markets our finding is that the market wise adaptation of strategy proof and non wasteful rules yields a strategy proof rule with the following efficiency property no strategy proof rule pareto dominates the rule such rules are abundant as they include the market wise use of the well known priority based rules of the top trading cycles and the deferred acceptance this result gives theoretical support to the independent operation of markets observed in real life markets as well as our practice in market design that separately treats each market for its design

matching with branch of choice contracts at the united states military academy branch selection is a key decision in a cadet s military career cadets at usma can increase their branch priorities at a fraction of slots by extending their service agreement this real life matching problem lls an important gap in market design literature although priorities fail a key substitutes condition the agent optimal stable mechanism is well dened and in contrast to the current usma mechanism it is fair stable and strategy proof adoption of this mechanism benets cadets and the army this new

strategy proof stochastic assignment abstract i study strategy proof assignment mechanisms where the agents reveal their preference rankings over the available objects a stochastic mechanism returns lotteries over deterministic assignments and mechanisms are compared according to first order stochastic dominance i show that non wasteful strategy proof mechanisms are not dominated by strategy proof mechanisms however non wastefulness is highly restrictive when the mechanism involves randomization in fact the random priority mechanism i e the random serial dictatorship and a recently adopted school choice mechanism deferred acceptance with random tie breaking are wasteful i find that both these mechanisms are dominated by strategy proof mechanisms in general strategy proof improvement cannot be due to merely reshuffling objects and therefore must involve assigning more objects

does higher economic and financial development lead to environmental degradation evidence from bric countries abstract a vast number of studies addressed the environmental degradation and economic development but not financial development moreover as argued by stern 2004 the rise and fall of the environmental kuznets curve world development 32 1419 1439 they present important econometric weaknesses using standard reduced form modeling approach and controlling for country specific unobserved heterogeneity we investigate the linkage between not only economic development and environmental quality but also the financial development panel data over period 1992 2004 is used we find that both economic and financial development are determinants of the environmental quality in bric economies we show that higher degree of economic and financial development decreases the environmental degradation our analysis suggests that financial liberalization and openness are essential factors for the co 2 reduction the adoption of policies directed to financial openness and liberalization to attract higher levels of r d related foreign direct investment might reduce the environmental degradation in countries under consideration in addition the robustness check trough the inclusion of us and japan does not alter our main findings

fuel price impacts and compliance costs associated with the renewable fuel standard rfs abstract us policy instruments concerning vehicle biofuels are currently being revisited for example as part of an on going annual renewable fuel standard rfs implementation the environmental protection agency epa requests stakeholder feedback analysis of programmatic effects including impacts on gasoline diesel prices and compliance costs motivated by the need for regulatory specific feedback a novel regional market model is developed that quantifies price impacts across different regional markets for a number of market variables including several types of compliance certificates known as renewable identification numbers rins an analysis of the most recent epa proposal suggests that the d4 biodiesel rin price could rise to 1 00 rin sensitivity results show that the d4 rin price is highly sensitive to soybean oil prices while d5 d6 rin prices are most sensitive to the volume of e85 consumed it was found that the projected costs associated with the rfs in 2017 could be reduced by approximately 50 if an additional 600 million gallons of e85 were consumed the analysis also suggests that the rfs does not dramatically affect the retail price of either gasoline and diesel fuels paid by consumers

energy consumption carbon emissions and economic growth in china abstract this paper investigates the existence and direction of granger causality between economic growth energy consumption and carbon emissions in china applying a multivariate model of economic growth energy use carbon emissions capital and urban population empirical results for china over the period 1960 2007 suggest a unidirectional granger causality running from gdp to energy consumption and a unidirectional granger causality running from energy consumption to carbon emissions in the long run evidence shows that neither carbon emissions nor energy consumption leads economic growth therefore the government of china can purse conservative energy policy and carbon emissions reduction policy in the long run without impeding economic growth

comprehensive carbon stock and flow accounting a national framework to support climate change mitigation policy greenhouse gas ghg inventories underpinning the united nations framework convention on climate change unfccc and kyoto protocol report each country s net annual emissions that is ghg flows yet the unfccc s goal is defined as a stock atmospheric ghg concentration flow inventories are apt for the fossil fuel sector where flows are effectively one way stock changes are almost entirely anthropogenic and stocks are stable in the absence of human perturbation for the land sector flow based ghg inventories obscure fundamental differences between ecosystems in their carbon stock stability restoration capacity and density this paper presents a national carbon accounting framework that is comprehensive and includes stocks as well as flows for reservoirs lands and activities continuously over time it complements current flow based inventories under the unfccc and kyoto protocol the framework differentiates reservoirs by their role in the global carbon cycle distinguishing between geocarbon carbon in the geosphere biocarbon carbon in the biosphere and anthropogenic carbon stockpiles products and waste a reservoir ranking system is proposed based on longevity reversibility of carbon loss and carbon density this framework will support policy makers and researchers grappling with mitigation strategies and competing demands on agricultural land and natural ecosystems

energy consumption carbon dioxide emissions and economic growth the case of saudi arabia abstract this paper investigates the dynamic causal relationships between energy consumption energy price and economic activity in saudi arabia based on a demand side approach we use a johansen multivariate cointegration approach and incorporate co 2 emissions as a control variable the results indicate that there exists at least a long run relationship between energy consumption energy price carbon dioxide emissions and economic growth furthermore a long run unidirectional causality stands from energy consumption to economic growth and co 2 emissions bidirectional causality between carbon dioxide emissions and economic growth and a long run unidirectional causality runs from energy price to economic growth and co 2 emissions in the short run there is unidirectional causality running from co 2 emissions to energy consumption and economic output and from energy price to co 2 emissions even though the energy led growth hypothesis is valid the share of energy consumption in explaining economic growth is minimal energy price is the most important factor in explaining economic growth hence policies aimed at reducing energy consumption and controlling for co 2 emissions may not reduce significantly saudi s economic growth investing in the use of renewable energy sources like solar and wind power is an urgent necessity to control for fossil fuel consumption and co 2 emissions

on market mediated emissions and regulations on life cycle emissions abstract we analyze the use of life cycle assessment lca as a regulatory tool using biofuel regulations as an illustrative example a regulatory context calls for a consequential lca clca of a policy as opposed to an attributional lca alca of a product in performing clca issues of scale price effects technology and policy in the counterfactual state of the world strategic behavior policy horizon etc need consideration this appears to increase both uncertainty in estimates and the cost of performing lca we suggest heuristics for determining vulnerability to harmful indirect effects at an early stage in the policy process and discuss alternative policies to limit harmful indirect effects without engaging in the full effort of computation and selection of a central estimate for uncertain outcomes

energy consumption and gdp in turkey is there a co integration relationship energy consumption and gdp are expected to grow by 5 9 and 7 annually until 2025 in turkey this paper tries to unfold the linkage between energy consumption and gdp by undertaking a co integration analysis for turkey with annual data over the period 1970 2003 the analysis shows that energy consumption and gdp are co integrated this means that there is a possibly bi directional causality relationship between the two we establish that there is a unidirectional causality running from gdp to energy consumption indicating that energy saving would not harm economic growth in turkey in addition we find that energy consumption keeps on growing as long as the economy grows in turkey

the impact of foreign direct investment on environmental quality a bounds testing and causality analysis for turkey abstract this study aims to investigate the impact of foreign direct investment fdi together with gross domestic product gdp the square of gdp and energy consumption on carbon dioxide co2 emissions in turkey over the period 1974 2010 we employ both the bounds test approach which has superior properties especially in small samples and the hatemi j test which takes structural breaks into consideration in the co integration analysis due to the co integration relationship between co2 emissions and other variables the autoregressive distributed lag ardl model is used in order to investigate short and long run elasticity between the variables the long run coefficients of the ardl model indicate that the effect of fdi on co2 emissions is positive but relatively small while the effects of the gdp and energy consumption on co2 emissions are quite considerable moreover the short run coefficients obtained by the error correction model ecm are found to be similar to those of the long run model the findings support the validity of the environmental kuznets curve ekc hypothesis in both time horizons the vector ecm based granger causality test is also applied to investigate the causal link the causality test results indicate the existence of a causality running from all explanatory variables to co2 emissions in the long run overall the findings suggest that turkey should promote energy efficiency with sustainable growth and encourage more fdi inflows particularly in technology intensive and environment friendly industries to improve environmental quality