Volume No. 8 Issue No.: 3A Page No.: 828-840 Jan-Mar 2014

 

THE ECONOMETRIC MODEL FOR CO2 EMISSIONS, ENERGY CONSUMPTION, ECONOMIC GROWTH, FOREIGN TRADE, FINANCIAL DEVELOPMENT AND URBANIZATION OF IRAN

 

Yazdi Soheilakhoshnevis* and Shakouri Bahram

Department of Economics, Islamic Azad University, South Tehran Branch, Tehran (IRAN)

 

Received on : September 10, 2013

 

ABSTRACT

 

In this study, we investigated the long run cointegrating and short run dynamics relation among carbon emissions, energy consumption, economic growth, urbanization, financial development and openness to trade in Iran by using Auto Regressive Distributed Lag (ARDL) testing approach of cointegration. The direction of causal relationship between the series is examined by VECM Granger causality approach.Empirical results for Iranover the period 1975-2011 suggest an evidence of a long-run relationship between the variables in Iran. The test for cointegration yielded evidence of a long-term relationship among these variables. The results confirm the existence of an environmental Kuznets curve in Iran for both the short and long term. This finding indicates that at the initial stage of development, the level of CO2 increases with income, and after some threshold level of income, this relationship may change from positive to negative as more efficient infrastructure and energy-efficient technology are implemented during the development of the country. The estimated coefficient of openness, financial development urbanization are negative and significant indicating that increasing level of urbanization and openness are responsible for CO2 emission in Iran. The causality tests also indicate that there was a unidirectional Granger causality running from per capita real income, per capita energy consumption, financial development and urbanization to per capita carbon emissions The outcomes of this study may be of great importance for policy and decision-makers in order to develop energy policies for Iran that contribute to curb carbon emissions while preserving economic growth.

 

Keywords : CO2 emissions, Financial development, Economic growth, Energy consumption, Tradeopenness, ARDL

 

 

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