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The Empirical Econometrics and Quantitative Economics Letters
Volume 4, Number 1, (March 2015): pp. 17 32.
ISSN 2286 7147 © EEQEL all rights reserved
Energy consumption, economic growth and CO2 emissions:
Empirical evidence from India
Geetilaxmi Mohapatra1 and A K Giri2
1Assistant Professor, Department of Economics and Finance,
Birla Institute of Technology and Science (BITS), Pilani-333031
Rajasthan, India
E-mail Id: geetilaxmi@gmail.com
2Associate Professor, Department of Economics and Finance,
Birla Institute of Technology and Science (BITS), Pilani-333031
Rajasthan, India
E-mail Id: akgiri.bits@gmail.com
ABSTRACT
This paper examines the causal and co-integrating relationship between energy
consumption, economic growth and CO2 emissions in a multivariate framework by
including urbanization, trade openness and gross fixed capital formation as other
control variables for an emerging economy like India. Using the annual data from
1971 to 2012, the paper applied the Auto Regressive Distributed Lag (ARDL)
bounds testing approach to examine the existence of short run and long run
relationship; and VECM Granger causality test for checking the direction of
causality. Stationary properties of the variables are checked by using DF-GLS, PP
and KPSS unit root tests. The bounds test result supports the existence of long run
relationship among the variables. The results of ARDL test indicate that energy
consumption and urbanization has positive impact on CO2 emissions while
economic growth has positive impact on the energy consumption in the long run.
The short run and long run causality results indicate the presence of unidirectional
causality from energy consumption and urbanization to air pollution and short run
causality from economic growth to energy consumption. The study concludes that
for accelerating economic growth, expansion of the industrial output depending on
energy consumption is needed, which puts pressure on the environmen |
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