The Impact of Energy Consumption, Urbanization, Financial Development, and Trade Openness on the Environment in Bangladesh: an Ardl Bound Test Approach

This paper examines the long run cointegrating relation and short run dynamics among carbon emissions, energy consumption, economic growth, urbanization, financial development and openness to trade in Bangladesh by using autoregressive distributed lag (ARDL) bounds testing approach of cointegration. Empirical results for Bangladesh over the period 1975-2010 suggest an evidence of a long-run relationship between the variables at 1% significance level in Bangladesh. The estimated coefficient of energy consumption and urbanization are positive and highly significant indicating that increasing level of urbanization and energy consumption are responsible for CO2 emission in Bangladesh. However, it is also found that an increase in the real GDP per capita tend to reduce carbon emissions per capita. On the other hand, there is no evidence of a causal relationship between carbon emission and financial development and trade openness. 1 Lecturer, Department of Economics, Shahjalal University of Science & Technology, Sylhet-3114, Bangladesh 2 Associate Professor, Department of Economics, Shahjalal University of Science & Technology, Sylhet-3114, Bangladesh