An Empirical Study of the Relationships between CO2 Emissions, Economic Growth and Openness
AbstractThis paper investigates the existence of the environmental Kuznets curve (EKC) for carbon dioxide (CO2) emissions and its causal relationships with economic growth and openness by using time series data (1971-2006) from China (an emerging market), Korea (a newly industrialized country), and Japan (a developed country). The sample countries span a whole range of development stages from industrialized to newly industrialized and emerging market economies. The environmental consequences according to openness and economic growth do not show uniform results across the countries. Depending on the national characteristics, the estimated EKC show different temporal patterns. China shows an N-shaped curve while Japan has a U-shaped curve. Such dissimilarities are also found in the relationship between CO2 emissions and openness. In the case of Korea and Japan it represents an inverted U-shaped curve, while China shows a U-shaped curve. We also analyze the dynamic relationships between the variables by adopting a vector auto regression or a vector error correction model. These models through the impulse response functions allow for analysis of the causal variable's influence on the dynamic response of emission variables and it adopts a variance decomposition to explain the magnitude of the forecast error variance determined by the shocks to each of the causal variables over time. Results show evidence of large heterogeneity among the countries and variables impacts.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5304.
Length: 29 pages
Date of creation: Nov 2010
Date of revision:
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Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- F18 - International Economics - - Trade - - - Trade and Environment
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-ENE-2010-11-27 (Energy Economics)
- NEP-ENV-2010-11-27 (Environmental Economics)
- NEP-RES-2010-11-27 (Resource Economics)
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