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Energy Consumption, CO2 Emissions and Economic Growth: Sweden's case
Södertörn University, School of Social Sciences, Economics.
2018 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The main purpose of this study is to examine the causal relations between energy use, CO2 emissions and economic growth for Sweden. Vector Error Correction model with annual data from 1970 to 2016 has been used in order to determine potential causality between the variables. The empirical findings indicate that in the long-run, causality relationship between energy consumption, CO2 emissions and economic growth cannot be rejected and it is bidirectional. This means that energy is a determining factor for economic growth in Sweden and that applying policies in order to reduce the CO2 emissions has slowed down economic growth in Sweden. This finding is consistent with the Feedback Hypothesis. But in the short-run no causality was found between energy and economic growth. According to Granger causality test results, bidirectional causality between CO2 emissions and energy consumption cannot be rejected in the short-run. Variables’ trends show that in the period under study, energy consumption and economic growth have moved in the same direction; meaning that higher energy consumption has led to higher economic growth. At the same time, lower CO2 emissions have been accompanied by higher economic growth. There is also short-run causality running from capital to economic growth according to VECM results. It can be suggested to the policy makers that in order to maintain economic growth and reduce environmental degradation, energy consumption should be shifted gradually from nonrenewable sources to renewable ones so to avoid decrease in economic growth and ensure lower levels of CO2 emissions in the long-run.

Place, publisher, year, edition, pages
2018. , p. 39
Keywords [en]
economic growth, energy consumption, CO2 emissions, Vector Error Correction model
National Category
Economics
Identifiers
URN: urn:nbn:se:sh:diva-35502OAI: oai:DiVA.org:sh-35502DiVA, id: diva2:1214695
Subject / course
Economics
Uppsok
Social and Behavioural Science, Law
Supervisors
Available from: 2018-06-07 Created: 2018-06-07 Last updated: 2018-06-07Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • harvard-anglia-ruskin-university
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf