DETERMINANTS OF CARBON DIOXIDE (CO2) EMISSIONS IN ASEAN COUNTRIES

During the last few years, the amount of Carbon Dioxide (CO2) released into the atmosphere has been rising extensively. This study attempts to investigate factors affecting Carbon Dioxide (CO2) emissions in ASEAN countries such as manufacturing, household consumption, agriculture, government expenditure and urbanization. The study uses time series data from 1995 to 2005. The data is tested by using the Augmented Dickey-Fuller (ADF) unit root test, Johansen and Juselius cointegration test, Vector Error Correction modeling to examine the nexus between the variables under the study. Apart of that, this study also used Variances Decomposition (VDC) and Impulse Response Function to forecast the relationship among the variables. By using Johansen and Juselius cointegration test, the result indicates that long run relationship exists between the variables for Malaysia, Indonesia and Philippines. Meanwhile, there is no long run relationship between the variables for Thailand. The result of VDC also indicates that the most endogenous variable for Malaysia and Indonesia is urbanization, meanwhile for Thailand and Philippines are government expenditure. Other that, the most exogenous variable for Indonesia is manufacturing and for Malaysia, Thailand, as well as Philippines the most exogenous variable is CO2. Therefore, this study suggests that government should implement the most effective economic policy to reduce the amount of CO2 released into the atmosphere in ASEAN countries