CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models

Abstract

a r t i c l e i n f o This paper examines the nexus between CO 2 emissions, energy consumption and economic growth using simultaneous-equations models with panel data of 14 MENA countries over the period 1990–2011. Our empirical results show that there exists a bidirectional causal relationship between energy consumption and economic growth. However, the results support the occurrence of unidirectional causality from energy consumption to CO 2 emissions without any feedback effects, and there exists a bidirectional causal relationship between economic growth and CO 2 emissions for the region as a whole. The study suggests that environmental and energy policies should recognize the differences in the nexus between energy consumption and economic growth in order to maintain sustainable economic growth in the MENA region. The nexus between environmental pollutant, energy consumption and economic growth has been the subject of considerable academic research over the past few decades. According to the Environmental Kuznets Curve (EKC) hypothesis, as output increases, carbon dioxide emissions increase as well until some threshold level of output was reached after which these emissions begin to decline. The main reason for studying carbon emissions is that they play a focal role in the current debate on the environment protection and sustainable development. Economic growth is also closely linked to energy consumption since higher level of energy consumption leads to higher economic growth. However, it is also likely that more efficient use of energy resources requires a higher level of economic growth. In literature, the nexus between environment and energy and growth has attracted attention of researchers in different countries for a long time. Roughly, we can categorize past studies in this field into three strands. The first focuses on the validity of the Environmental Kuznets Curve (EKC) hypothesis. The EKC hypothesis postulates that the relationship between economic development and the environment resembles an inverted U-curve, e.g. Ang (2007) and Saboori et al. (2012). That is, environmental pollution levels increase as a country grows, but begin to decrease as rising incomes pass beyond a turning point. This hypothesis was first proposed and approved by Grossman and Krueger (1991). Dinda (2004) offer extensive review surveys of these studies. Further examples consist of Friedl and Getzner (2003) and Managi and Jena (2008). However, a higher level of national income does not necessarily warrant greater efforts to contain the CO 2 emissions. Recently , Jaunky (2010) investigated the …

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Cite this paper

@inproceedings{Omri2015CO2EE, title={CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models}, author={Anis Omri}, year={2015} }