Environmental Kuznets curve in Indonesia, the role of energy consumption and foreign trade

This study examines the dynamic relationship among carbon dioxide (CO2) emissions, economic growth, energy consumption and foreign trade based on the environmental Kuznets curve (EKC) hypothesis for Indonesia during the period 1971–2007. The Auto regressive distributed lag (ARDL) methodology is used as an estimation technique. The results do not support the EKC hypothesis, which assumes an inverted U-shaped relationship between income and environmental degradation. The long-run results indicate that foreign trade is the most significant variable in explaining CO2 emissions in Indonesia followed by Energy consumption and economic growth. The stability of the variables in estimated models is also examined. The result suggests that the estimated models are stable over the sample period