The causal link among militarization, economic growth, CO2 emission, and energy consumption

Abstract

This paper examines the long-run and the causal relationship among CO2 emissions, militarization, economic growth, and energy consumption for USA for the period 1960-2013. Using the bound test approach to cointegration, a short-run as well as a long-run relationship among the variables with a positive and a statistically significant relationship between CO2 emissions and militarization was found. To determine the causal link, MWALD and Rao's F tests were applied. According to Rao's F tests, the evidence of a unidirectional causality running from militarization to CO2 emissions, from energy consumption to CO2 emissions, and from militarization to energy consumption all without a feedback was found. Further, the results determined that 26% of the forecast-error variance of CO2 emissions was explained by the forecast error variance of militarization and 60% by energy consumption.