CO2 Emissions, Economic Growth and Energy Consumption Nexus: the case of India

Abstract In the present global world environmental sustainability has become an important element in achieving a long-term development policy. Nowadays, developing countries like India struggling to deal with these concerns, which all requires a specific treatment. On this basis, this study is to investigate the causal relationship between emissions, economic growth and energy consumption for India over the time period of 1990-2019. The study is applied Autoregressive Distributed Lag (ARDL) model to look at the long-run dynamics, while the Vector Error Correction (VECM) model is applied to identify causal direction. The ARDL test confirms that there is a long-run relationship exists between the variables. The VECM results reveal that there is a long-run causality in emissions, GDP and EC. A range of diagnostic tests were also used to confirm the validity and reliability of the results. The results also point out to a unidirectional causality running from emissions to economic growth to energy consumption, from energy consumption to emissions. This study reveals new findings that contribute the existing literature and may be of particular interest to the country’s policymakers in light of the economic system and role of in environmental issues.