Carbon Emissions, Energy Consumption and GDP per Capita Nexus in Iran: Causality Analysis Using Maximum Entropy Bootstrap

It is clear that any planning and policy making about economic growth as one of the macroeconomic purpose’s، need to special consideration to the environment and its relationship with production. therefore، in this study، we employ a maximum entropy Bootstrap to assessment the causality between carbon emissions and economic growth more accurate in comparison to conventional hypothesis tests based on asymptotic theory. We employ simulation based inference to investigate the causal relationship between carbon emissions and economic growth in Iran for the 1973–2010 period، both in a bivariate and a multivariate framework by including energy consumption per capita، financial development and openness variables in the model. In bivariate model، Our results indicate that there is uni-directional causality from GDP per capita to carbon emissions per capita while multivariate framework shows no evidence of a causal relation between carbon emissions and growth. Results indicate that there is uni-directional causality from GDP per capita to energy consumption per capita. So we can employ environmental policies without any reduction of economic growth.