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Jurnal Ekonomi Malaysia

57 (1) 2023 167 – 179

How Does Carbon Emission Affect the Economy?

Institute of Malaysian and International Studies (IKMAS)
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.

Andrew@ukm.edu.my

Department of Economics
Faculty of Business and Economics
Universiti Malaya
50603 Kuala Lumpur, MALAYSIA.

evelyns@um.edu.my

Abstract

The objective of the study is to determine the effect of carbon (CO2) emissions, energy consumption and the usage of renewable energy on the Gross Domestic Product. Using Malaysian data from 1990 to 2020, this study employs multivariate VAR estimation, namely the impulse response function and the Toda-Yamamoto Granger causality method to identify the relationships between the variables. The findings show a significant and reciprocal relationship between GDP and energy use. However, the consumption of renewable energy has little impact on the GDP due to the country’s low levels of renewable energy consumption in comparison to its usage of fossil fuels. Since renewable energy plays a critical part in lowering carbon emissions, its usage needs to be intensified to fully have an impact on the economy. Hence, policies to reduce carbon emissions, such as incentives for adopting green technology and production standards, should be emphasized.

Keywords

economic development; empirical studies of economic growth; environment and development; environment and growth; sustainability; time series model

JEL Codes

C22, O1, O44, O47, Q56

Author’s Acknowledgement

Andrew Jia-Yi Kam would like to thank Universiti Kebangsaan Malaysia for providing funding for the research via FRGS/1/2020/SS0/UKM/02/10. The usual caveat applies

http://dx.doi.org/10.17576/JEM-2023-5701-12
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Jia Yi, A. K., & Devadason, E. S. (2023). How Does Carbon Emission Affect the Economy?. Jurnal Ekonomi Malaysia, 57(1), 167–179. http://dx.doi.org/10.17576/JEM-2023-5701-12

@article{yi2023how,
  title={How Does Carbon Emission Affect the Economy?},
  author={Jia Yi, Andrew Kam and Devadason, Evelyn S.},
  journal={Jurnal Ekonomi Malaysia},
  volume={57},
  number={1},
  pages={167—179},
 

year={2023},
}

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