The Interrelationship between Economic Growth and CO2

Kais H. Alwan, Saeed Al-Tarawneh

Abstract


This study investigates the long run dynamic interrelationship between economic growth and carbon dioxide emissions as an environmental indicator in Jordan. The Environmental Kuznets Curve (EKC) hypothesis is tested for this purpose. In addition, the direction of causality in short and long run among the variables is tested. The study used data for the period (1980-2010). In doing so, the autoregressive distributed lag (ARDL) bounds testing approach and vector error correction method (VECM) are applied. The empirical results reveal that the long run parameters of CO2 emissions model are consistent with (EKC) hypothesis. Furthermore, the study found a short and long run bidirectional causality among variables of CO2 model. Based on these findings, the study recommends: environmental considerations must be taken into account when macroeconomic policies are designed and industrial and transportation sector must be encouraged to import cleaner technologies.

Keywords


Interrelationship, Environmental Kuznets Curve, Economic Growth, CO2 Emissions, cleaner technologies, Jordan

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