<abstract xml:lang="en" xmlns="http://www.w3.org/1999/xhtml"><p>This study examined static and dynamic causal relationships between primary energy consumption, gross domestic product, and CO2 emissions for India during the period 1970-2007. We tested for the presence of unit root and cointegration among the variables by incorporating endogenously determined structural breaks in the data. The causality is examined between test variables using Granger's approach (in VAR framework), and Dolado and Lütkepohl's approach. We find evidence of no cointegration relationship among the test variables in the presence of structural breaks. Further, static analysis shows that primary energy consumption does not granger-cause GDP, whereas GDP granger-causes primary energy consumption. The dynamic analysis shows conflicting results on the causal relationship between energy consumption and GDP. Since GDP explains 75.9% of the forecast error variance of primary energy consumption, whereas primary energy consumption explains only 0.96% of the forecast error variance of GDP, we can suggest that India should adopt policies that reduce energy consumption.</p></abstract>

This study examined static and dynamic causal relationships between primary energy consumption, gross domestic product, and CO2 emissions for India during the period 1970-2007. We tested for the presence of unit root and cointegration among the variables by incorporating endogenously determined structural breaks in the data. The causality is examined between test variables using Granger's approach (in VAR framework), and Dolado and Lütkepohl's approach. We find evidence of no cointegration relationship among the test variables in the presence of structural breaks. Further, static analysis shows that primary energy consumption does not granger-cause GDP, whereas GDP granger-causes primary energy consumption. The dynamic analysis shows conflicting results on the causal relationship between energy consumption and GDP. Since GDP explains 75.9% of the forecast error variance of primary energy consumption, whereas primary energy consumption explains only 0.96% of the forecast error variance of GDP, we can suggest that India should adopt policies that reduce energy consumption.

Primary Energy Consumption, CO2 Emissions and Economic Growth: Evidence from India

Faculty of Applied Economics, Faculty of Management, ICFAI University Tripura

South East European Journal of Economics and Business

This study examined static and dynamic causal relationships between primary energy consumption, gross domestic product, and CO2 emissions for India during the...

Primary Energy Consumption, CO2 Emissions and Economic Growth: Evidence from India

Published Online: Jan 27, 2012

Page range: 99 - 117

DOI: https://doi.org/10.2478/v10033-011-0019-6

Keywords
CO2 emissions, primary energy consumption, economic growth, causality, IRFs, VDs, structural breaks

This content is open access.

Primary Energy Consumption, CO2 Emissions and Economic Growth: Evidence from India

Published Online: Jan 27, 2012

Page range: 99 - 117

DOI: https://doi.org/10.2478/v10033-011-0019-6

KeywordsCO2 emissions, primary energy consumption, economic growth, causality, IRFs, VDs, structural breaks

This content is open access.

Keywords
CO2 emissions, primary energy consumption, economic growth, causality, IRFs, VDs, structural breaks