Abstract

Objectives: This paper investigates the association between carbon dioxide emanations, energy utilization, real gross domestic product, trade, financial development and urbanisation in an econometric time series model.

Methods: The statistical specification is -Test of stationarity of data. Testing the existence of cointegrating relation. Finding an error correction model. Finally for robust results the study employs impulse response function and vari-ance decomposition method .The impulse response function traces the responsiveness of the endogenous variables to shocks to each of the other exogenous variables over a certain period of timeThe software used is STATA (12).

Findings: Gross Domestic product and energy consumption continues to be the explanatory variables for carbon emissions in the Asian region. The coefficient of gross domestic product is a positve and statistically signficant for all countries ; so growth of income leads to environmental degradation proxied by carbon emissions. For India the bulk of the shock of the dependent variable is due to improvement in gross domestic product and trade openness. For Pakistan the bulk of the shock in the dependent variable is on account of gross domestic product, energy utilization. In the long run, the countries need to embrace more energy conservation policies no matter what the directional approach in the short run may be. The contribution of the current paper is to assess the short and long run equilibrium association of carbon emanations, economic expansion, energy use, urban development and trade for India, Sri Lanka, Pakistan and China under a Vector Error Correction Model.

Improvements: The study contributes in examining the dynamics of short run association among the variables; to explore the presence of long term equilibrium relation, to capture the linear dependencies among the variables under study and to test the responsiveness to shocks in the system.

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