An econometric investigation of Dynamic Linkages between CO2 emissions, energy consumption, & economic growth: A Case of India and China

The paper investigates the co-integrating relationship between economic growth, energy and environment for India and China for the period 1970-2014 (using log transformed yearly data). Whereas GDP per capita is taken as the growth proxy , CO2 emissions per capita represents environmental degradation & fossil fuel consumption is the proxy for energy consumption. The methodology adapted is ARDL Partial ‘F’ Bounds Test with single structural break. The results of the study showed that Co-integrating relation was established amongst all the variables except when CO2 (China) is taken as dependent variable. The ECM term was negative and significant in all the cases (except for CO2 China again) Further the speed of adjustment towards equilibrium was highest @16 % per annum for CO2 of India while it was between 3% - 8 % p.a for rest of the variables. Chow Break even confirmed that India CO2 emissions had a break in 1996.