A Cointegration Analysis Of Economic Growth And Co2 Emissions: Case Study On Malaysia

Abstract

The paper aims to establish a long-run and causal relationship between economic growth, CO2 emissions, international trade, energy consumption, and population density in Malaysia. The study will use annual data from 1970 to 2014. A unique cointegrating relationship between our variables was identified, and the Environmental Kuznets Curve (EKC) hypothesis was analyzed using the Auto Regressive Distributed Lag (ARDL) methodology. Our empirical results suggest the existence of a long-run relationship between per capita CO2 emissions and our explanatory variables. The Vector Error Correction Model (VECM) methodology was used to analyze the Granger Causality, and the results show the absence of causality between CO2 emissions and economic growth in the short-run while demonstrating uni-directional causality from economic growth to CO2 emissions in the long-run.

Keywords: CO2 emissions (dependent variable), Environmental Kuznets Curve (EKC) Auto-Regressive Distributed Lag (ARDL), economic growth

Article Review Status: Published

Pages: 73-92 (Download PDF)

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