ENERGY CONSUMPTION, CARBON DIOXIDE AND ECONOMIC GROWTH NEXUS IN INDONESIA

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M.Jihadi, Yoosita Aulia, Zainal Arifin, Dewi Nurjannah, Nurul Asfiah

Abstract

This research study demonstrates the relationship between carbon dioxide emission, energy consumption and economic development in Indonesia. The annual data has been taken for the period of 1970 to 2018. Several tests have been applied to conduct this study such as structural break test, stationary test, Toda-Yamamoto test, Johansen and Juselius method and Variance decomposition test. According to the results of causality test, there is single side causality running from economic development to energy consumption. Results, therefore, support conservation hypothesis for Indonesia. The outcome of variance decomposition indicates that energy consumption affects the economic development in short run. The empirical output also reveals fluctuations in per capita income that highlight the need of an effective public policy. The study also recommends various energy conservation policies for economic development.

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