Causality among Carbon Emissions, Energy Consumption and Growth in India

This study attempts to investigate the long-run Granger causality relationship between energy consumption, carbon dioxide emission and economic growth in India over the period 1971-2007. The augmented Dickey– Fuller test (ADF), Phillips-Perron test (PP) and KPSS test are used to test for Granger causality in cointegration models which take account of the stochastic properties of the variables. The most important result is that there is feedback causal relationship between energy consumption and economic growth in India which implies that the level of economic activity and energy consumption mutually in‡uence each other; a high level of economic growth leads to a high level of energy consumption and vice versa. The value of the error correction term con…rms the expected convergence process in the long-run for carbon emissions and growth in India which University, Faculty of Economics and Administrative Sciences, 33800, Mersin, Turkey. Tel: +90 324 6514828 Email: [email protected] yUniversity, Department of Management and Engineering Economics, SE-581 83 Linköping, Sweden. E-mail: [email protected]