Carbon Dioxide Emission, Human Capital and Economic Growth: Long-Run Relation with Short-Run Dynamics
Abstract
This paper examine the causal relationship between CO2 emission, human capital, and economic growth using an autoregressive distributed lag model during a period of 1981–2017. The result showed that CO2 emission has a negative effect in the long-run and positive effect in the short-run, while human capital has a positive effect in the long-run and negative effect in the short-run on economic growth in Ethiopia. The result of Granger causality showed that a bidirectional causal relationship from reduction of CO2 emission to economic growth, from human capital to economic growth and a unidirectional causal relationship between human capital and reduction of CO2 emission in Ethiopia. However, there is no significant causality from human capital to reduction of CO2 emission. Policymakers should emphasize human capital development and establish policies, strategies, and programs related to the reduction of CO2 emission in Ethiopia.
Keywords: CO2 emission, Human Capital, Economic Growth, ARDL Model, Ethiopia
DOI: 10.7176/JETP/10-5-01
Publication date:September 30th 2020
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ISSN (Paper)2224-3232 ISSN (Online)2225-0573
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