Energy, environment and growth nexus in South Asia

The present study investigates the energy, environment and growth nexus for a panel of South Asian countries including Bangladesh, India, Pakistan, Sri Lanka and Nepal. The simultaneous analysis of real GDP, energy consumption and CO₂ emissions is conducted for the period 1980–2010. Levin panel unit root test and Im test panel unit root both indicate that all the variables are I (1). In addition, Kao’s panel Cointegration test specifies a stable long-term relationship between all these variables. Empirical findings show that a 1 % increase in energy consumption increases output by 0.81 % in long run whereas for the same increase in CO₂ emission output falls by 0.17 % in long run. Panel Granger causality tests report short-run causality running from energy consumption to CO₂ emissions and from CO₂ emissions to GDP.