The aim of this paper is to investigate the existence of environmental Kuznets curve (EKC) in an open economy like Tunisia using annual time series data for the period of 1971-2010. The ARDL bounds testing approach to cointegration is applied to test long run relationship in the presence of structural breaks and vector error correction model (VECM) to detect the causality among the variables. The robustness of causality analysis has been tested by applying the innovative accounting approach (IAA). The findings of this paper confirmed the long run relationship between economic growth, energy consumption, trade openness and CO 2 emissions in Tunisian Economy. The results also indicated the existence of EKC confirmed by the VECM and IAA approaches. The study has significant contribution for policy implications to curtail energy pollutants by implementing environment friendly regulations to sustain the economic development in Tunisia.

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This paper investigates the causal relationship between road transportation energy consumption, fuel prices, transport sector value added and CO 2 emissions in Tunisia for the period 1980-2012. We apply the newly developed combined cointegration test proposed by Bayer and Hanck (2013) and the ARDL bounds testing approach to cointegration to establish the existence of long-run relationship in presence of structural breaks. The direction of causality between these variables is determined via vector error correction model (VECM).Our empirical exercise reveals that the cointegration is present. Energy consumption adds in CO 2 emissions. Fuel prices decline CO 2 emissions. Road infrastructure boosts in CO 2 emissions. Transport value-added also increases CO 2 emissions. The causality analysis indicates the bidirectional casual relationship between energy consumption and CO 2 emissions. Road infrastructure causes CO 2 emissions and similar is true from opposite side in Granger sense. The bidirectional causality is also found between transport value-added and CO 2 emissions. Fuel prices cause CO 2 emissions, energy consumption, road infrastructure and transport value-added. This paper provides new insights to policy makers to design a comprehensive energy, transport and environment policies for sustainable economic growth in long run.

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