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Is the impact of financial development on energy consumption in Jamaica asymmetric?

Adian McFarlane (School of Management, Economics and Mathematics, King’s University College, Western University Canada, London, Canada)
Leanora Brown (Department of Finance and Economics, The University of Tennessee, Chattanooga, Tennessee, USA)
Kaycea Campbell (Department of Economics, Los Angeles Pierce College, Woodland Hills, California, USA)
Anupam Das (Department of Economics, Justice and Policy Studies, Mount Royal University, Calgary, Canada)

International Journal of Energy Sector Management

ISSN: 1750-6220

Article publication date: 31 May 2022

Issue publication date: 18 May 2023

119

Abstract

Purpose

The purpose of this study is to determine whether causal asymmetries exist between energy consumption and three dimensions of financial development in Jamaica.

Design/methodology/approach

The authors use the non-linear autoregressive distributed lag method to identify the long- and short-run associations between energy consumption and different measures of financial development in Jamaica for the period 1980 to 2018.

Findings

There are two central findings. First, cointegrating relationships run from the dimensions of financial development to energy consumption. Second, the authors find asymmetries in these relationships. In the long run, asymmetries are such that rising levels of financial development have a neutral impact on energy consumption. By contrast, falling levels of financial development in the long run are associated with increases in energy consumption. In the short run, the authors find evidence of asymmetries only in changes in the overall level of financial development on energy consumption.

Practical implications

One practical implication is that for Jamaica to avoid some of the potential negative environmental consequences resulting from the positive impact on energy consumption arising from falling levels of financial development, a strong financial development policy will be important.

Social implications

There will be positive social impacts from financial development in the area of climate finance.

Originality/value

To the authors’ knowledge, this is the first study on Jamaica that examines the financial development–energy nexus. Further, the authors use relatively new and comprehensive measures of financial development.

Keywords

Citation

McFarlane, A., Brown, L., Campbell, K. and Das, A. (2023), "Is the impact of financial development on energy consumption in Jamaica asymmetric?", International Journal of Energy Sector Management, Vol. 17 No. 4, pp. 677-692. https://doi.org/10.1108/IJESM-02-2022-0004

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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