VAR Model Analysis of Energy Consumption, CO2 Emissions, Financial Development, and Economic Growth in Honduras (1980-2022) (#1699)

Authors

Amaya Sarmiento, Carlos Rafael

Paredes Heller, Juan Jacobo

Abstract

This study analyzes the interrelationship between economic growth (GDP), per capita electricity consumption (EC), per capita CO2 emissions (CO2), financial development (FD), and government expenditure as a percentage of GDP (GOV) in Honduras during the period 1980-2022. Using a VAR model, the temporal dynamics among these variables are evaluated, as well as their cointegration, Granger causality test, impulse response, and variance decomposition. The results show a close relationship between energy consumption, economic growth, and emissions, with significant implications for the country’s sustainable devel- opment. This study contributes to the understanding of economic- environmental interactions in the context of a developing economy and provides practical insights for designing public policies that integrate environmental sustainability and economic growth.