Macroeconomic Factors Affecting Carbon Dioxide Emissions in the Philippines: A Time Series Analysis

Abstract

This paper examines the relationship between macroeconomic variables (Gross Domestic per capita, Energy Consumption, Trade Openness, and Foreign Direct Investment) and CO2 Emissions in the Philippines from 1981 to 2014. Using multivariate Ordinary Least Squares (OLS) regression, the results indicate that GDP per capita, Energy Consumption, and Trade Openness are significant and positively related parameters of CO2 emissions. Conversely, Foreign Direct Investment is revealed to be positively related but insignificant to CO2 emissions in the Philippines. Moreover, the R-squared of the model and the F-test results suggest that the overall model is robust and significant, respectively. The diagnostic tests employed (including Variance Inflation Factor, Breusch-Godfrey test, White test, Ramsey RESET test, and Jarque-Bera Test) show that the regression model has no evidence of multicollinearity, heteroscedasticity, non-normality, and misspecification. Finally, the researchers offer recommendations that open the potential for future studies and improve the econometric model.