Time frequency relationship between energy consumption, economic growth and environmental degradation in the United States: Evidence from transportation sector

This study examines the impact of energy consumption, economic growth on environmental degradation in the United States by using the wavelet technique. In order to examine the association between variables, monthly data from the years of 1973 (January) to 2015 (July) were used. The techniques applied on the dataset includes wavelet correlation, wavelet covariance, maximal overlap discrete wavelet transform, continuous wavelet power spectrum and wavelet coherence spectrum. The result indicated that in the short, medium and long run, energy consumption has a positive influence over carbon emissions. Moreover, the result of causality test shows that unidirectional causality running from energy consumption to carbon emissions is found. Therefore, it can be recommended that policy makers should pay more consideration on this. US is working hard to shrink its carbon emission to 50% and to become a green economy by the year 2020. Along with this, an appropriate deployment of plans is essential for the feat of such initiatives which includes the encouragement of using hybrid engine vehicles or even energy effective vehicles and to opt specific economic strategies which regulate the pollution industries, as this will result in a reduction of CO2emission in the US.