Energy Consumption, Carbon Dioxide Emissions and Economic Growth: Empirical Results for Selected Developed Countries

This research investigates the association between energy consumption, CO2 emissions and economic growth for the United States, Japan, Russia, Canada and Australia. It also estimates the impact of other macroeconomic fundamentals including inflation rate, investment rate and trade openness on economic growth. Multiple regression analysis is employed for annual data covering the timespan from 1989 to 2014. The empirical findings indicate that energy consumption has a positive and significant impact on economic growth of the selected countries. This means that energy is a critical factor in economic development. CO2 emissions, which is a proxy for fuel based energy use, has a destructive influence on the environment. Therefore, in this study, various policies have been suggested to reduce carbon dioxide emissions. In addition, the results show that positive association exist between investment rate, trade openness and output growth. However, inflation rate in all of the selected countries has a negative but insignificant impact on economic growth. Keywords: economic growth, energy consumption, CO2 emissions, inflation rate, investment rate, trade openness