On the relationships between CO2 emissions, energy consumption and income: The importance of time variation

Ahdi Noomen Ajmi, Shawkat Hammoudeh, Duc Khuong Nguyen and João Ricardo Sato

Energy Economics, 2015, vol. 49, issue C, 629-638

Abstract: The environment that governs the relationships between energy consumption, carbon dioxide (CO2) emissions and gross domestic product (GDP) in the G7 countries changes over time due to variations in economic growth, regulatory policy and technology. Using a novel approach that may detect causalities when the time-constant hypothesis is rejected, we find significant time-varying Granger causalities among the variables under consideration. There is bidirectional causality between GDP and energy consumption for Japan, unidirectional causality running from GDP to energy consumption for Italy, and unidirectional causality running from energy consumption to GDP for the resource country Canada. Moreover, the results also show a bidirectional time-varying causality between energy consumption and CO2 emissions for the United States, and causality from energy consumption to CO2 emissions for France. Finally, while we find significant time-varying causalities running from GDP to CO2 emissions for Italy and Japan, the finding of inverted N-shaped curves (Italy and Japan) lends no support to the traditional Environmental Kuznets Curve (EKC) hypothesis for these countries. It implies that environmental policy and economic growth should go hand in hand. Other policy implications of the empirical results have been proposed.

Keywords: Energy consumption; CO2 emissions; GDP; Causality; Inverted N-shaped EKC (search for similar items in EconPapers)
JEL-codes: Q47 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (123)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988315000444
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:49:y:2015:i:c:p:629-638

DOI: 10.1016/j.eneco.2015.02.007

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().