Causal Interactions Between Co2 Emissions, Financial Development, Energy and Tourism

Abstract

Aim of this study is to investigate the casual relationship between tourism, financial development, energy consumptions and carbon emissions in Turkey and four European Union countries France, Spain, Italy and Greece which are the main competitors of Turkish tourism for the 1995-2010 period. According to the results of the study, for the panel as a whole there are statistically significant feedback effects between the variables. One per cent increase in energy consumption will rise CO 2 emission by 3.02 %, a one per cent increase in the financial development will decrease CO 2 emission by 0.12 % and also one percentage increase in tourist arrival will decrease CO 2 emission by 0.11 %. The causality analysis shows uni-directional causal relationship between the tourist arrivals and financial development. And also there is a bi-directional causality relationship between CO 2 emission, financial development, and energy and tourist arrival. This study is one of very few studies which have investigated the dynamic relationship between financial development, energy consumption, carbon emissions and tourism in Turkey and competitive countries using the panel data analysis. The contribution of the paper is to fill these research gaps in the literature.