This study investigates EKC hypothesis in Indonesia over the period of 1980–2019. Within the EKC framework, we examine the impact of GDP, energy consumption, and financial development on CO2 emissions using ARDL bound-test. The results show that the study variables are cointegrated, representing a long-run relationship. The EKC hypothesis is not validated as we found a U-shaped relationship. Given the turning point (IDR13,274,579) has been reached in 1987, a further increase in GDP would only be associated with an increase in CO2 emissions. While energy consumption increases CO2 emissions, financial development seems to improve environmental quality by lowering CO2 emissions.

Bahasa Abstract

Penelitian ini menyelidiki keberadaan Hipotesis EKC di Indonesia selama periode 1980–2019. Dalam kerangka EKC, penelitian ini mengkaji pengaruh PDB, konsumsi energi, dan pembangunan sektor keuangan terhadap emisi karbon (CO2). Penelitian ini menggunakan Autoregressive Distributed Lagged (ARDL) bound-test. Hasil penelitian menunjukkan bahwa terdapat kointegrasi antar variabel. Sementara itu, hipotesis EKC tidak divalidasi melainkan hubungan kurva berbentuk U. Turning point telah tercapai pada tahun 1987, ini menyiratkan bahwa peningkatan PDB lebih lanjut hanya akan dikaitkan dengan peningkatan emisi CO2. Selain itu, konsumsi energi meningkatkan emisi CO2 dan pembangunan sektor keuangan tampak memperbaiki kualitas lingkungan dengan menurunkan emisi CO2.


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