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The Damaging Growth: An Empiric Evidence of Environmental Kuznets Curve in Indonesia

Darwanto Darwanto, Nenik Woyanti, Purbayu Budi Santosa, Hadi Sasana and Imam Ghozali
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Darwanto Darwanto: Faculty of Economics and Business, Diponegoro University, Semarang, Indonesia
Nenik Woyanti: Faculty of Economics and Business, Diponegoro University, Semarang, Indonesia
Purbayu Budi Santosa: Faculty of Economics and Business, Diponegoro University, Semarang, Indonesia
Hadi Sasana: Faculty of Economics and Business, Diponegoro University, Semarang, Indonesia
Imam Ghozali: Faculty of Economics and Business, Diponegoro University, Semarang, Indonesia

International Journal of Energy Economics and Policy, 2019, vol. 9, issue 5, 339-345

Abstract: This study examines the short-run and long-run relationships between economic growth, carbon dioxide (CO2) emissions and energy consumption within a sample period of 1990-2016. The study used autoregressive distributed lag approach to test the cointegration relationship and Granger vector error correction model causality test to investigate the direction of causality. This study does not support the hypothetical relationship (environmental Kuznets curve) for a significance level of 5%. The long-run test of Granger causality shows that there is a two-way causal relationship of economic growth, CO2 emissions, and energy consumption. This result indicates that a reduction in energy consumption is an effective way to control CO2 emissions but will simultaneously impede economic growth. Therefore, setting suitable policy related to efficient consumptions of energy resources and renewable energy resources is necessary.

Keywords: Environmental Kuznets Curve; CO2 Emissions; Energy Consumption. (search for similar items in EconPapers)
JEL-codes: Q42 Q43 C10 (search for similar items in EconPapers)
Date: 2019
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