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ABSTRACT. This paper aims to examine the relationship between CO2 emission, economic growth, and energy use in Malaysia. The Johansen co-integration model was then applied. The results show that one co-integrating equation exists, thus implying the long-term relationships between carbon dioxide emission, energy consumption, and economic growth and the results are affirmed by the VECM test. The results of the Granger causality model show that in Malaysia, energy use influence economic growth and also carbon dioxide emission. The findings in our study are highly important in policy implementation. Energy consumption can trigger environmental problems in Malaysia. Nevertheless, energy conservation policies remain complex in Malaysia. Increasing energy consumption to enhance economic growth can escalate carbon dioxide emission. pp. 41–53
JEL Codes: N7; O13; P28; Q43

Keywords: energy consumption; economic growth; CO2 emission

How to cite: Shaari, Mohd Shahidan, Nor Ermawati Hussain, and Intan Maizura Abd Rashid (2014), “The Relationship between Energy Use, Economic Growth, and CO2 Emission in Malaysia,” Economics, Management, and Financial Markets 9(2): 41–53.

MOHD SHAHIDAN SHAARI
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School of Business Innovation and Technopreneurship,
Universiti Malaysia Perlis
NOR ERMAWATI HUSSAIN
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School of Economics, College of Business,
Univeristi Utara Malaysia
INTAN MAIZURA ABD RASHID
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School of Business Innovation and Technopreneurship,
Universiti Malaysia Perlis

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