Macroeconomic Determinants of CO2 Emissions in Australia: Evidence From ARDL Bound Testing Approach

Authors

Reza Sherafatian-Jahromi, Universiti Putra MalaysiaFollow
Mohd-Shahwahid Haji Othman, Universiti Putra Malaysia

Abstract

This paper examines the macroeconomic determinants of CO2 emissions in Australia by applying the autoregressive distributed lag bound testing approach to cointegration. Findings reveal that CO2 emissions, energy consumption, financial development, and trade openness are cointegrated only when CO2 emissions are considered as the dependent variable. Under this situation, energy consumption and economic development lead to environmental degradation, whereas financial development improves the environment quality in Australia in the long run. The impact of trade openness on CO2 emissions is positive. However, this impact is lower than that of economic development and energy consumption. Moreover, bidirectional causality is found between CO2 emissions and economic development in the short run.

Recommended Citation

Sherafatian-Jahromi, Reza and Othman, Mohd-Shahwahid Haji (2020) "Macroeconomic Determinants of CO2 Emissions in Australia: Evidence From ARDL Bound Testing Approach," Asia-Pacific Social Science Review: Vol. 20: Iss. 4, Article 4.
Available at: https://animorepository.dlsu.edu.ph/apssr/vol20/iss4/4