Abstract

This study examines the dynamic relationship among carbon dioxide (CO₂) emissions, economic growth, energy consumption and foreign trade based on the environmental Kuznets curve (EKC) hypothesis in Indonesia for the period 1971–2007, using the Auto Regressive Distributed Lag (ARDL) methodology. The results do not support the EKC hypothesis, which assumes an inverted U-shaped relationship between income and environmental degradation. The long-run results indicate that foreign trade is the most significant variable in explaining CO₂ emissions in Indonesia followed by Energy consumption and economic growth. The stability of the variables in estimated model is also examined. The result suggests that the estimated model is stable over the study period.

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