So close, no matter how far: A spatial analysis of CO2 emissions considering geographic and economic distances

In recent years, the effects of climate change have become a topic of growing interest in the literature. Many works claimed the importance of spillover effects while studying CO2 emissions. Most part of them considers these indirect effects from a geographical perspective. The reduction of transportation costs makes other factors more important. Thus, the main aim of this paper is to analyse the existence of spatial dependence, considering geographical and economic proximity and comparing both measures. Empirically, we make use of the World Input–Output database with a worldwide focus from 2000 to 2014. Based on an environmentally extended multiregional input–output model, we estimate the CO2 emissions embodied in the domestic production and international trade between countries. To analyse the dependence from both perspectives, we carry out a spatial econometric analysis and make use of two different spatial weight matrices. The results offer a new approach on this field, highlighting the importance of the spillover effects to explain the CO2 emissions of the local country, showing that economic proximity is even more important than geographical one.