Structural Breaks, Urbanization and CO2 Emissions: Evidence from Turkey

Abstract

The aim of this study is to examine the relationship between urbanization and CO2 emissions in the case of Turkey by adding economic growth and energy consumption to the CO2 emissions specification. The study covers annual time series data over the period of 1960-2014. The autoregressive distributed lag bounds testing approach to cointegration was utilized to investigate the long-run relationship among under structural breaks. The causal relationship among the variables was explored through Toda-Yamamoto test. The empirical findings reveal that i) each variable (except for energy consumption) is integrated at I(1) under structural breaks, ii) the variables are cointegrated in the presence of structural break, iii) the validity of environmental Kuznets curve was confirmed both in the short-run and long-run, iv) CO2 emissions are primarily affected by economic growth, energy consumption and urbanization in the long run and v) urbanization causes CO2 emissions. The study provides important policy implications for Turkish economy.