Economic growth, energy consumption, and carbon dioxide emissions in the E7 countries: A bootstrap ARDL bound test

Abstract

Background: International awareness of the impact of global warming and climate change is increasing. Developing countries face the task of achieving sustainable economic growth while also improving the efficiency of their energy consumption. The E7 countries (Brazil, India, Indonesia, Mexico, People's Republic of China, Russia, and Turkey) are all highly concerned with the promotion of carbon-emission-reduction strategies. Methods: This research uses a bootstrap autoregressive distributed lag (ARDL) bound test with structural breaks to examine the cointegration and causality relations between economic growth, energy consumption, and carbon dioxide (CO2) emissions in the E7 countries. Results: There is no cointegration between economic growth, energy consumption, and CO2 emissions for People's Republic of China, Indonesia, Mexico, and Turkey. Evidence of cointegration is found for Brazil when CO2 emissions are the dependent variable and for India and Russia when energy consumption is the dependent variable. For all of the E7 countries except Indonesia, short-run Granger causality was found to exist from energy consumption to CO2 emissions and from economic growth to CO2 emissions for Brazil, India, Mexico, and People's Republic of China. Short-run Granger causality was also found from economic growth to energy consumption for Brazil, India, Indonesia, Mexico, and People's Republic of China, and from CO2 emissions to energy consumption for all E7 countries. Conclusions: The results consistently show that energy consumption is the main cause of CO2 emissions, which has led to the emergence of global warming problems. Increases in CO2 emissions compel the E7 countries to develop sound policies on energy consumption and environmental pollution.