Economic performance of Indonesia amidst CO₂ emissions and agriculture: a time series analysis

To minimize the awful situation confronting the entire globe, the global warming danger has raised the intensity of consciousness from all areas of life. Therefore, the research assesses the impact of CO₂ emissions and energy use on economic performance and considers trade openness, urbanization, and agriculture in Indonesia utilizing data covering the period from 1965 to 2019. The current research employed the dynamic ordinary least square (DOLS) and autoregressive distributed lag (ARDL) tests to capture the long-run association between these economic indicators. Furthermore, the gradual shift and wavelet coherence tests are utilized to capture the direction of causality. The ARDL bound test discloses a long-run interconnection among the variables of interest. The outcomes of the ARDL and DOLS depict that CO₂ emissions, agriculture, energy use, and urbanization trigger economic growth. Moreover, the wavelet coherence test findings revealed a positive correlation between economic growth and urbanization, CO₂ emissions, agriculture, and energy consumption. Furthermore, there is evidence of a weak and positive correlation between economic growth and trade openness. The gradual shift causality test outcomes disclosed that economic growth can predict urbanization and energy consumption, while agriculture can predict economic growth. These outcomes have far-reaching significance for economic growth and the selected variables in Indonesia.