Causality Among Energy Consumption, CO2 Emission, Economic Growth and Trade: A Case of India
Srinivasan P. (2014), Causality Among Energy Consumption, CO2 Emission, Economic Growth and Trade: The Case of India, Journal of Academic Research in Economics, Vol. 6, No. 3, pp. 315-335.
21 Pages Posted: 27 Jan 2015
Date Written: January 27, 2015
This paper investigates the causal nexus between energy consumption, CO2 emissions, economic growth and trade in India using the Perron (1989) unit root test, Gregory and Hansen (1996) cointegration test and Vector Error Correction Model. The study results exhibit a long-run relationship between energy consumption, CO2 emissions, economic growth and trade in India. The empirical results confirm that energy consumption influences the economic activity in the short-run, implying that higher rate of economic growth is driven by consumption demand for energy in the economy. This is also well in consistent with the findings of Paul and Bhattacharya (2004) in the Indian context. Further, the study detects one way causation exist from energy use to CO2 emission and trade, and CO2 emissions to economic growth in the short-run.
Keywords: Energy Consumption, Economic Growth, CO2 Emissions, Trade, Cointegration
JEL Classification: Q44, Q53, Q56
Suggested Citation: Suggested Citation