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Effects of Energy Consumption, Economic Growth and Urbanization on Indonesian Environmental Quality

Author

Listed:
  • Husna Purnama

    (Doctoral Program, Faculty of Economics and Business, The University of Lampung, Indonesia)

  • Toto Gunarto

    (Faculty of Economics and Business, The University of Lampung, Indonesia)

  • Ida Budiarty

    (Faculty of Economics and Business, The University of Lampung, Indonesia)

Abstract

This study attempts to investigate the impact of urbanization on environmental degradation in the presence of economic growth, trade, and use of energy for Indonesia. For this purpose, this study uses CO2 emission as endogenous indicators and GDP per capita, the use of energy, urbanization, and trade liberalization as exogenous indicators. Annual time series data are taken from World Development Indicators (WDI) for the period of 1970 to 2018. First of all, in order to check the characteristics of the indicator ADF and PP unit root tests are applied. Results indicate that Trade and Urbanization are stationary at a level while rests of all are at first difference. Further, the study uses the ARDL-bound test to check the co-integration in the model and verifies the existence of co-integration. The long run results are estimated by ARDL methodology. Results confirmed that there does not exit the EKC hypothesis in Indonesia because economic growth boosts the carbon production level in Indonesia. Energy consumption also creates environmental degradation while trade decreases the carbon emission level. Urbanization has not significantly influenced the level of the environment. It is just because of the country s high urban development, energy use is still less due to the less income of the majority of population, and this may be one of the explanations why urbanization is not affecting the country s carbon dioxide pollution.

Suggested Citation

  • Husna Purnama & Toto Gunarto & Ida Budiarty, 2020. "Effects of Energy Consumption, Economic Growth and Urbanization on Indonesian Environmental Quality," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 580-587.
    • Handle: RePEc:eco:journ2:2020-06-75
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    References listed on IDEAS

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    Cited by:

    1. Khalid Eltayeb Elfaki & Unggul Heriqbaldi, 2023. "Analyzing the Moderating Role of Industrialization on the Environmental Kuznets Curve (EKC) in Indonesia: What Are the Contributions of Financial Development, Energy Consumption, and Economic Growth?," Sustainability, MDPI, vol. 15(5), pages 1-14, February.
    2. Zhang, Hongsheng & Xiong, Peizhi & Yang, Shangzhao & Yu, Jinna, 2023. "Renewable energy utilization, green finance and agricultural land expansion in China," Resources Policy, Elsevier, vol. 80(C).

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    More about this item

    Keywords

    Emission of CO2 ; Urbanization; Use of Energy; ARDL; Development of Economy; Indonesia;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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