CO2 emissions, urbanisation and economic growth: evidence from Asian countries

Abstract

This paper empirically examines the dynamic causal relationships between CO2 emissions, energy consumption, economic growth, trade openness and urbanisation for the period 1980–2014 using the pooled mean group (P.M.G.) approach and panel Granger causality tests for Asian countries. Using panel unit root tests we found that all variables integrated of order 1. From the Pedroni panel cointegration test, there is a long-run relationship among the variables. The results showed that urbanisation increases energy consumption and CO2 emissions. Environmental quality is considered a normal good in the long run. The Granger causality test results support that there is a bidirectional causal relationship between economic growth, urbanisation and CO2 emissions. Consumption is greater than the impact on CO2 emissions in the eastern region and some evidence supports the compact city theory. These results contribute not only to advancing the existing literature, but also deserve special attention from policymakers and urban planners in Asian countries.