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Energy consumption, CO 2 emissions, and economic growth: evidence from Indonesia

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  • Jo-Hee Hwang
  • Seung-Hoon Yoo

Abstract

Energy policy-makers in Indonesia are interested in the causal relationship between energy consumption, CO 2 emissions, and economic growth. Therefore, this paper attempts to analyze the short- and long-run causality issues between energy consumption, CO 2 emissions, and economic growth in Indonesia using time-series techniques. To this end, annual data covering the period 1965–2006 are employed and tests for unit roots, co-integration, and Granger-causality based on an error-correction model are applied. The results show that there is a bi-directional causality between energy consumption and CO 2 emissions. This means that an increase in energy consumption directly affects CO 2 emissions and that CO 2 emissions also stimulate further energy consumption. In addition, the results support the occurrence of uni-directional causality running from economic growth to energy consumption and to CO 2 emissions without any feedback effects. Thus, energy conservation and/or CO 2 emissions reduction policies can be initiated without the consequent destructive economic side effects. Copyright Springer Science+Business Media B.V. 2014

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  • Jo-Hee Hwang & Seung-Hoon Yoo, 2014. "Energy consumption, CO 2 emissions, and economic growth: evidence from Indonesia," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 63-73, January.
    • Handle: RePEc:spr:qualqt:v:48:y:2014:i:1:p:63-73
    DOI: 10.1007/s11135-012-9749-5
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