Is Growth Good or Bad For the Environment in Indonesia?

Eko Mahar Diputra, Jungho Baek


This paper attempts to contribute to the literature on the growth-environment nexus by asking: What is the effect of growth on Indonesia’s CO2 emissions, controlling for energy consumption and urbanization? To that end, an autogressive distributed lag (ARDL) approach to cointegration is applied to annual data for the period 1971-2013. Results show that income growth tends to increase CO2 emissions monotonically in Indonesia. It is also found that there is strong evidence that energy consumption increases CO2 emissions and little evidence that urbanization causes significant environmental degradation.

Keywords: ARDL, CO2 emissions, environment, growth, Indonesia

JEL Classifications: C2, Q4, Q5

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