The Interplay Between Energy Consumption, Economic Growth and Environmental Pollution: Application of Spatial Panel Simultaneous-Equations Model

Abstract

Economic growth planning and policy making is one of the macrocosmic goals which it need to pay specific attention to energy and environmental sector and their relationship with production. Therefore, this study has conducted to investigate the relationship between economic growth, energy consumption and environmental pollution using a Spatial Panel Simultaneous-Equations model for 9 developing countries during 2000-2011. Empirical results of this method show that energy consumption, economic growth and environmental pollution in each country is affected by these factors in neighboring countries. The results of research confirm there exists bidirectional causality between energy consumption and environmental pollution, economic growth and environmental pollution. Thus, there is a bidirectional causal relationship between energy consumption and economic growth. Regarding to result of this study suggests to achieve the sustainable economic growth should be used tax tools for controlling the emissions of CO2 and replacement of the renewable energies with fossil fuels.

Keywords

• spatial autoregressive
• environmental pollution
• economic growth
• energy consumption
• simultaneous-equations