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ABSTRACT. This paper examines the long-run relationship between carbon dioxide emissions and economic growth in Kenya during the period 1980–2008. The study incorporates energy consumption in the analysis as an intermittent variable – thereby creating a trivariate model. Using the ARDL-Bounds testing approach developed by Pesaran et al. (2001), the study finds that there is a distinct unidirectional causal flow from economic growth to CO2 emissions in Kenya in the short run. However, in the long run there is no causality between CO2 emissions and economic growth in either direction. Other results show that there is a short run unidirectional causal flow from energy consumption to CO2 emissions, a short run bi-directional causality between energy consumption and economic growth, and a long run unidirectional causal flow from economic growth to energy consumption. The empirical findings of this study imply that Kenya can pursue carbon emissions reduction policies without necessarily compromising its long-term growth trajectory. pp. 41–52
JEL Classification: Q43, C32

 

Keywords: Kenya, CO2 emissions, energy consumption, economic growth

 

NICHOLAS M. ODHIAMBO
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University of South Africa

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