The Environmental Kuznets Curve and the Causal Relationship between Carbon Dioxide Emissions and GDP per Capita in Indonesia, 1960 - 2000

This article attempts to analyze a hypothesis on the environmental Simon Kuznets curve which emphasized relationship between carbon dioxide per capita and real GDP per capita in Indonesia. This article also tries to test the hypothesis of the relationship between “Granger Cause” incomes per capita to the emission of carbon dioxide per capita. Regarding that economic growth is not only increasing prosperity of the people but also increasing the emission of carbon dioxide which generates negative externality such as global warming. This study proved that relationship between carbon dioxide per capita and real income per capita was flat which means that emission was not only caused by the real income per capita. Dynamic analysis showed that in the long run that relationship is absurd. Meanwhile for the short run there is one way direction relationship from income per capita to emission of carbon dioxide per capita. In short economic growth has increased emission of carbon dioxide per capita. In order to control emission of carbon dioxide, this article suggests that efficiency on energy consumption and effective control on forest fire have to be properly implemented.