Co2 emission, power consumption and economic growth in Bangladesh: an ARDL bound testing approach

Abstract

This paper focuses on the empirical relationship between economic growth, co2 emission, power consumption, fossil fuel energy consumption and financial development of Bangladesh using data of 1985-2013. Findings indicate that a significant relationship exists between economic growth and power consumption, economic growth and fossil fuel energy consumption in the long run. The long run relationship between co2 emission and economic growth as well as financial development is insignificant. Whereas, Granger causality shows that bidirectional association exists among economic growth and power consumption, financial development and economic growth, fossil fuel energy consumption and economic growth in the short run. However, unidirectional casualty has been found among power consumption to financial development, co2 emission to power consumption, fossil fuel energy consumption to financial development, co2 emission to financial development and co2 emission to fossil fuel energy consumption. Error correction mechanism confirms that except power consumption all the explanatory variables quick return to equilibrium in the short run.