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Nexus of Energy Consumption, CO2 Emission and Economic Growth in India: Evidence from Toda and Yamamoto Granger Non-Causality Approach

Jaganath Behera


The present study investigated the output, energy and pollution nexus hypothesis in the context of India. The study used the annual time series data for the period 1970-2010. The empirical findings of the study show that there is a high pairwise correlation exist between energy consumption and economic growth. The cointegration result suggests that there is a long-run equilibrium relationship exist between energy consumption, economic growth and CO2 emissions. The vector error correction result shows a positive and significant impact of energy consumption on CO2 emission. The result also reveals that economic growth has a positive and significant impact on energy consumption. Due to 1% increase in economic growth, it will increase the energy consumption 60% at the 5% level of significance. The Toda-Yamamoto Granger causality result indicates there is unidirectional causality running from energy consumption to carbon emission and economic growth to carbon emission.


Energy, cointegration, CO2, economic growth, India, error correction, causality.

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