Co2 Emissions, Energy Consumption and Economic Growth Nexus in MENA Countries: Evidence from Simultaneous Equations Models

Abstract

This paper examines the nexus between CO2 emissions, energy consumption and economic growth using simultaneous-equations models with panel data of 14 MENA countries over the period 1990-2011. Our empirical results show that there exists bidirectional causal relationship between energy consumption and economic growth. However, the results support the occurrence of unidirectional causality from energy consumption to CO2 emissions without any feedback effects, and there exists bidirectional causal relationship between economic growth and CO2 emissions for the region as a whole. The study suggests that environmental and energy policies should recognize the differences in the nexus between energy consumption and economic growth in order to maintain sustainable economic growth in MENA region.