Carbon emissions, energy consumption and industrial growth in Bangladesh: Empirical evidence from ARDL cointegration and Granger causality analysis

Abstract

This research aims to examine the empirical cointegration, long and short run dynamics and causal relationships between carbon emissions, energy consumption and industrial growth in Bangladesh over the period of 1972–2011. The ARDL Bounds Testing methodology and Granger Causality test in an augmented VAR framework are applied. The ARDL bounds tests as well as additional cross-checking test convincingly confirmed long run cointegration between carbon emissions, energy consumption and industrial production in Bangladesh. The industrial production and energy consumption have significant positive impact on the carbon emissions both in the short and long-runs. Likewise, Granger causality analysis indicated a unidirectional causation both from industrial production and energy consumption to carbon emissions i.e., the industrial development or economic development in Bangladesh is taking place at the cost of environmental quality.