Asymmetric Effect of Energy Consumption and Economic Growth on Carbon Emissions in Ghana: Evidence from Nonlinear ARDL Approach

ABSTRACT

This paper explores the asymmetric effect of energy consumption and economic growth on carbon emissions in Ghana for the period 1970-2019. The empirical analysis employs the Nonlinear Autoregressive Distributed Lag (NARDL) approach to decompose energy consumption and economic growth into positive and negative partial sum so as to explore possible asymmetric effects of the variables on carbon emissions. The results show evidence of cointegration among the variables and the presence of asymmetry for energy consumption in the short and long run, and only long-run asymmetry exists for economic growth. Again, the findings suggest that in Ghana, positive shocks in energy consumption have significant increasing effect on carbon emissions in the long run and negative shocks in energy consumption exert decreasing effects on carbon emissions. However, the impact of positive shocks is much greater than the impact of negative shocks. The results also reveal that in the long run, positive shocks in economic growth have significant decreasing effect on carbon emissions and vice versa. It is recommended that the government of Ghana develop policies aimed at encouraging the use of renewable energy and energy-efficient technologies.