Title: Empirical verification of causality between CO2 emissions, energy consumption, foreign direct investment, gross domestic product, and openness of the economy: evidence from India

Authors: Sushil Kumar Rai; Abhay Mohan Bembey; Devshree Sarfare

Addresses: School of Business (SOB), University of Petroleum and Energy Studies (UPES), Knowledge Acres, Kandoli, Dehradun-248007, Uttrakhand, India ' School of Business (SOB), University of Petroleum and Energy Studies (UPES), Knowledge Acres, Kandoli, Dehradun-248007, Uttrakhand, India ' School of Business (SOB), University of Petroleum and Energy Studies (UPES), Knowledge Acres, Kandoli, Dehradun-248007, Uttrakhand, India

Abstract: The present paper addresses the issue of causal relationships between CO2 emissions, energy consumption (EC), foreign direct investment (FDI), gross domestic product (GDP), and openness of the economy in India by employing time-series data for 37 years from 1978 to 2014. The result indicates the existence of the long-run relationship between the considered variables. Further, a strong joint unidirectional causality is running from energy consumption, foreign direct investment, gross domestic product, and openness of the economy to CO2 emissions. The finding supports the thesis of the causal cyclical relationship between the above-mentioned variables; therefore, the policy of efficient energy use along with the adaptation of new technology in production activity will address the issue of reduction in CO2 emissions without compromising the objectives of high growth rate through foreign direct investment and openness of the economy.

Keywords: causality; CO2 emissions; energy consumption; foreign direct investment; FDI; gross domestic product; GDP; openness of the economy; cointegration; vector error correction model; VECM; sustainability.

DOI: 10.1504/IJSE.2019.100679

International Journal of Sustainable Economy, 2019 Vol.11 No.3, pp.237 - 257

Available online: 16 May 2019 *

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