Economic growth, energy consumption and carbone dioxide emissions: recent evidence from panel data analysis for 58 countries

Abstract

This paper investigates the causal relationship between energy consumption, $$\hbox {CO}_{2}$$ emissions and economic growth using dynamic simultaneous-equation panel data models for 58 countries over the period 1990–2012. We also estimate this relationship for three regional panels; namely, Europe and North Asia, Latin America and the Caribbean, and the Middle East, North Africa, and the sub-Sahara African region. Our results indicate that there is a bidirectional causality relationship between energy consumption and economic growth for the four panels, while our results significantly reject the neo-classical assumption that energy is neutral for growth. Similarly, the results support the occurrence of a bidirectional causality relationship between energy consumption and $$\hbox {CO}_{2}$$ emissions for the four panels. A unidirectional causality running from $$\hbox {CO}_{2}$$ emissions to economic growth for the Latin American and Caribbean, which implies that, the environment degradation has a negative impact on economic growth.