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Environmental Science and Pollution Research

, Volume 22, Issue 20, pp 15663–15676 | Cite as

Causal relationship between CO2 emissions, real GDP, energy consumption, financial development, trade openness, and urbanization in Tunisia

  • Sahbi FarhaniEmail author
  • Ilhan Ozturk
Research Article

Abstract

The aim of this paper is to examine the causal relationship between CO2 emissions, real GDP, energy consumption, financial development, trade openness, and urbanization in Tunisia over the period of 1971–2012. The long-run relationship is investigated by the auto-regressive distributed lag (ARDL) bounds testing approach to cointegration and error correction method (ECM). The results of the analysis reveal a positive sign for the coefficient of financial development, suggesting that the financial development in Tunisia has taken place at the expense of environmental pollution. The Tunisian case also shows a positive monotonic relationship between real GDP and CO2 emissions. This means that the results do not support the validity of environmental Kuznets curve (EKC) hypothesis. In addition, the paper explores causal relationship between the variables by using Granger causality models and it concludes that financial development plays a vital role in the Tunisian economy.

Keywords

Environmental Kuznets curve (EKC) Auto-regressive distributed lag (ARDL) bounds testing approach Tunisia 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  1. 1.LAMIDED, ISG SousseUniversity of SousseSousseTunisia
  2. 2.Faculty of Economics and Administrative SciencesCag UniversityMersinTurkey

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