Abstract

This study examines the relationship between carbon emissions, FDI, financial development, and economic growth in Indonesia throughout the period 1980-2019 by applying the Auto-regressive Distributed Lag (ARDL) model. The results found that carbon emissions are cointegrated with FDI inflows, financial development indicator and economic growth. This research observes a statistically positive relationship between carbon emissions and FDI in the long and short run. The estimated short run model shows that economic growth statistically has a significant impact on carbon emissions. In the long run, this study found that economic growth has a negative relationship with carbon emission, but statistically insignificant. Meanwhile, financial development indicators have positive relationship with emissions. However, the coefficient of financial development is not statistically significant for both short and long run model.