Title: Causality among CO₂ emissions, energy consumption and economic growth in Italy

Authors: Pavlos Stamatiou; Nikolaos Dritsakis

Addresses: Department of Applied Informatics, University of Macedonia, Economics and Social Sciences, 156 Egnatia Street, 540 06 Thessaloniki, Greece ' Department of Applied Informatics, University of Macedonia, Economics and Social Sciences, 156 Egnatia Street, 540 06 Thessaloniki, Greece

Abstract: The aim of this paper is to investigate the relationship between CO₂ emissions (carbon dioxide emissions), energy consumption and economic growth in Italy, using annual data covering the period 1960-2011. The unit root tests results indicated that the variables are not stationary in levels but in their first differences. Subsequently, the Johansen cointegration test showed that there is a cointegrated vector between the examined variables. The vector error correction model (VECM) is used in order to find the causality relations among the variables. The empirical results of the study revealed that both in the short and long run there is a strong unidirectional causality relation between economic growth and CO₂emissions with direction from economic growth to CO₂ emissions. Finally, the impulse response functions indicated that a reduction in CO₂ emissions has a positive effect on energy consumption, while it causes a decrease in economic growth.

Keywords: carbon emissions; energy consumption; economic growth; environmental Kuznets curve; cointegration test; vector error correction; causality; variance decomposition; impulse response analysis; Italy.

DOI: 10.1504/IJCEE.2019.102509

International Journal of Computational Economics and Econometrics, 2019 Vol.9 No.4, pp.268 - 286

Received: 16 Nov 2016
Accepted: 23 Aug 2017
Published online: 30 Sep 2019 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article