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Abstract

The aim of this country specific study is to understand long and short-run linkages between economic growth, energy consumption and CO2 emission using Tunisian data over the period 1971-2004. Statistical findings indicate that economic growth, energy consumption and CO2 emission are related in the long-run and provide some evidence of inefficient use of energy in Tunisia, since environmental pressure tends to rise faster than economic growth. In the short run, results support the argument that economic growth exerts a positive “causal” influence on energy consumption growth. In addition, results from impulse response do not confirm the hypothesis that an increase in pollution level induces economic expansion. Although Tunisia has no commitment to reduce Greenhouse Gas emissions, energy efficiency investments and emission reduction policies will not hurt economic activities and can be a feasible policy tool for Tunisia.

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