Income, Carbon Emission and Energy Consumption: The Analysis of Linear and Non-Linear Causality Relationship for Turkey

Abstract

Today, the global warming is one of the most important environmental problems. The increase in energy demand, by means of economic growth, brings with environmental problems throughout the world. In particular, the countries which choose fossil fuel for their production and consumption accelerate the global warming as increasing the amount of carbon dioxide (CO2) emissions. Thus it is important, to consider the variables of economic growth, energy and environment together and to determine the direction of the relationships in between them, for policy makers and implementers. Aim of this study is testing the relationship in between the variables of CO2 emission, energy consumption and economic growth through parametric and non-parametric causality models, for Turkey. The results of parametric Granger Causality Test reveal that, there is a unidirectional causality relationship from energy consumption and CO2 emission to gross domestic product (GDP) and there is not any kind of causality in between the variables of energy consumption and CO2 emission. According to the results of non-parametric causality analyses, there is bidirectional causality relationship in between the variables of CO2 emission, energy consumption and economic growth. Main result of this study, considering the results of both parametric and non-parametric analyses, the results of non-parametric analyses support bidirectional causality relationship between the related variables more strongly.