The long-run elasticity estimates of per capita carbon emissionswith
respect to per capita energy consumption expected to be β2〉0. This
means as an increase in per capita energy consumption results in an increase
in per capita carbon emissions. We found β2 is about 0.5 at 5%
significance level. Under the EKC hypothesis, the long-run elasticity estimates
of per capita carbon emissionswith respect to per capita real income
and the square of per capita real income expected to be β3〉0 and
β4〈0. This means as per capita real income increases, per capita carbon
emissions increase as well until some threshold level of per capita real
income is reached after which per capita carbon emissions begin to decline.
In long-run analysis we found β3〉0 and β4〈0 at 1% significance
level. These results support the validity of EKC hypothesis in Turkish
economy. Therefore, beyond a threshold level of per capita real income,
any increase in per capita real income likely reduces the per capita carbon
emissions in Turkey. In addition, the coefficient of openness variable
is also positive at 5% significance level. It shows that an increase
in foreign trade to GDP ratio results in an increase in per capita carbon
emissions. Finally, financial development variable has no significant effect
on per capita carbon emissions in the long- run. The coefficients of
estimated ECTs are also negative and statistically significant at 1% confidence
level. These values indicate that any deviation from the long-run
equilibriumbetween variables is corrected for each period to return the
long-run equilibrium level (See Table 4).
This study also explores causal relationship between the variables
by using error-correction based Granger causality models which are
weak (short-run) Granger causality and long-run Granger causality.
The results of both Granger causality models (see Table 5) can be
summarized as follows:
i) There is an evidence of a long-run causal relationship from per
capita energy consumption, per capita real income, the square of
per capita real income, openness and financial development to
per capita carbon emissions. This long-run causality results also