The Causality between Human Capital, Energy Consumption, CO2 Emissions, and Economic Growth: Empirical Evidence from Indonesia

Abstract

This study to investigate the causality between human capital, energy consumption, CO2 emissions, and economic growth in Indonesia. The data used world development indicator (WDI) has obtained from the World Bank database during 1985-2017. The analysis method used vector error correction model. The finding of this study, first, there is the validity of long-run balance causality exists only for the model of human capital nor energy consumption; second, neither CO2 emissions per capita nor real GDP per capita cause human capital in the long-run causality nor short-run; Third, there is no causal evidence from the human capital, CO2 emission per capita, and real GDP per capita to consumption energy per capita, but in the short-run, there is causal evidence between CO2 emission and energy consumption; fourth, there is no causal evidence from the human capital, consumption energy per capita, and real GDP per capita toward CO2 emission per capita, but human capital, consumption energy, and economic growth cause CO2 emission in the short-run; and the last finding, there is no causal evidence from the human capital, consumption energy per capita, and CO2 emission per capita to real GDP per capita, neither in the long-run causality and short-run.Keywords: human capital, energy consumption, carbon dioxide emission, economic growth, VECM Granger causality.JEL Classifications: J24; Q43; Q53; Q56DOI: https://doi.org/10.32479/ijeep.7377