The Causality between Human Capital, Energy Consumption, CO2 Emissions, and Economic Growth: Empirical Evidence from Indonesia

Abstract

This study to investigate the causality between human capital, energy consumption, CO₂ emissions, and economic growth in Indonesia. The data used world development indicator (WDI) has obtained from the World Bank database during 1985-2017. The analysis method used vector error correction model. The finding of this study, first, there is the validity of long-run balance causality exists only for the model of human capital nor energy consumption; second, neither CO₂ emissions per capita nor real GDP per capita cause human capital in the long-run causality nor short-run; Third, there is no causal evidence from the human capital, CO₂ emission per capita, and real GDP per capita to consumption energy per capita, but in the short-run, there is causal evidence between CO₂ emission and energy consumption; fourth, there is no causal evidence from the human capital, consumption energy per capita, and real GDP per capita toward CO₂ emission per capita, but human capital, consumption energy, and economic growth cause CO₂ emission in the short-run; and the last finding, there is no causal evidence from the human capital, consumption energy per capita, and CO₂ emission per capita to real GDP per capita, neither in the long-run causality and short-run.

Keywords: human capital, energy consumption, carbon dioxide emission, economic growth, VECM Granger causality.

JEL Classifications: J24; Q43; Q53; Q56

DOI: https://doi.org/10.32479/ijeep.7377