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Testing the EKC Hypothesis in Indonesia: Empirical Evidence from the ARDL-Based Bounds and Wavelet Coherence Approaches

Author

Listed:
  • Adebayo, Tomiwa Sunday

    (Faculty of Economics and Administrative Science, Cyprus International University, Turkey)

Abstract

This study aims to explore the long-run and causal effects of energy consumption, trade openness and economic growth on CO2emissions in Indonesia. It employs newly developed econometric techniques using yearly data between 1980 and 2016. To capture long-run effects, the study uses the ARDL estimator, while thewavelet coherence technique is employed to investigate correlationsand causal effects among the variables. The main novelty of the wavelet coherence technique is that it can obtain information on dynamic correlation and/or causality between economic variables at different frequencies andindifferent time periods. The findings from the ARDL long-run and short-run estimates reveal the validity of the environmental Kuznets curve (EKC) hypothesis in Indonesia. Furthermore, both economic growth and energy usage positively trigger CO2emissions, while trade openness enhancesthe environmental quality. The wavelet coherence approach also provides supportive evidence for the ARDL long-run estimate.

Suggested Citation

  • Adebayo, Tomiwa Sunday, 2021. "Testing the EKC Hypothesis in Indonesia: Empirical Evidence from the ARDL-Based Bounds and Wavelet Coherence Approaches," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 28(1), pages 78-100, June.
    • Handle: RePEc:ris:apecjn:0054
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    Citations

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    Cited by:

    1. Feriansyah & Hari Nugroho & Aura Asyda Larre & Qori’atul Septiavin & Cintya Khairun Nisa, 2022. "Economic Growth and CO2 Emission in ASEAN: Panel-ARDL Approach," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 68, pages 102-113, Desember.
    2. Tomiwa Sunday Adebayo & Dervis Kirikkaleli, 2021. "Impact of renewable energy consumption, globalization, and technological innovation on environmental degradation in Japan: application of wavelet tools," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 16057-16082, November.
    3. Khalid Eltayeb Elfaki & Unggul Heriqbaldi, 2023. "Analyzing the Moderating Role of Industrialization on the Environmental Kuznets Curve (EKC) in Indonesia: What Are the Contributions of Financial Development, Energy Consumption, and Economic Growth?," Sustainability, MDPI, vol. 15(5), pages 1-14, February.
    4. Tomiwa Sunday Adebayo & Sema Yılmaz Genç & Rui Alexandre Castanho & Dervis Kirikkaleli, 2021. "Do Public–Private Partnership Investment in Energy and Technological Innovation Matter for Environmental Sustainability in the East Asia and Pacific Region? An Application of a Frequency Domain Causal," Sustainability, MDPI, vol. 13(6), pages 1-15, March.
    5. Enock Kojo Ayesu & Clement Agonyim Asaana, 2023. "Global shipping and climate change impacts in Africa: the role of international trade," Journal of Shipping and Trade, Springer, vol. 8(1), pages 1-17, December.
    6. Abdullah Emre Caglar, 2023. "Can nuclear energy technology budgets pave the way for a transition toward low‐carbon economy: Insights from the United Kingdom," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 198-210, February.
    7. Olanipekun, Ifedolapo Olabisi & Ozkan, Oktay & Olasehinde-Williams, Godwin, 2023. "Is renewable energy use lowering resource-related uncertainties?," Energy, Elsevier, vol. 271(C).
    8. Ayhan Orhan & Tomiwa Sunday Adebayo & Sema Yılmaz Genç & Dervis Kirikkaleli, 2021. "Investigating the Linkage between Economic Growth and Environmental Sustainability in India: Do Agriculture and Trade Openness Matter?," Sustainability, MDPI, vol. 13(9), pages 1-20, April.

    More about this item

    Keywords

    CO2emissions; economic growth; energy consumption; Wavelet Coherence; Indonesia;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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