CO2 emissions, energy consumption and GDP: evidence from Iraq

The relationships between environmental quality, energy use and economic output have created growing attention over the past decades among researchers and policy makers. Focusing on the empirical aspects of the role of carbon dioxide (CO2) emissions and energy use in affecting the economic output, this paper is an effort to fulfil the gap in a comprehensive case study at a country level using modern econometric techniques. To achieve the goal, this country-specific study examines the short- and long-run relationships among energy consumption (using disaggregated energy sources: petroleum products and the direct combustion of crude oil, and electricity), CO2 emissions and gross domestic product (GDP) for Iraq using time series analysis from the year 1980– 2010. To investigate the relationships between the variables, this paper employs the Augmented Dickey–Fuller (ADF) and the Phillips–Perron (PP) unit root tests for stationarity, the Johansen and Juselius method for cointegration and a vector error correction model (VECM) for both short- and long-run causality among the research variables for the sample. All the independent variables in this study show very strong significant effects on GDP in the country for the long term. The long-run equilibrium in the VECM suggests negative long-run causalities from consumption of petroleum products and the direct combustion of crude oil and the natural gas use to GDP. Conversely, a positive impact of electricity consumption on GDP found to be significant in the long run in Iraq during the period. Overall, this study found that the associations could to be differed by the sources of energy in the case of Iraq over the period 1980–2010