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The relationship among CO2 emissions, electricity power consumption and GDP in OECD countries

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  • Bella, Giovanni
  • Massidda, Carla
  • Mattana, Paolo

Abstract

This paper proposes a panel vector error correction model investigation of a quadratic relationship linking CO2 emissions, GDP levels and electric power consumption. We find that two independent long-run relationships emerge from the data. Since the null of homogeneity across units with regard to long-run elasticities is strongly rejected, we proceed by clustering countries according to the signs of the estimated coefficients. The approach allows us to form three groups: in the first there is evidence of an optimistic scenario, where both CO2 emissions and electric power consumption are bound to decrease in the long-run. An optimistic scenario for emissions reduction is also provided in the second cluster where, however, the long-run relationship between income and electric power consumption shows an U-shaped pattern, instead. Finally, the third cluster can be associated with a much worrying scenario where per capita CO2 is expected to grow with income. A joint consideration of long-run parameters and causality links allows us to propose cluster-tailored policy suggestions.

Suggested Citation

  • Bella, Giovanni & Massidda, Carla & Mattana, Paolo, 2014. "The relationship among CO2 emissions, electricity power consumption and GDP in OECD countries," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 970-985.
  • Handle: RePEc:eee:jpolmo:v:36:y:2014:i:6:p:970-985
    DOI: 10.1016/j.jpolmod.2014.08.006
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    Cited by:

    1. Usama Al-Mulali & Ilhan Ozturk & Hooi Lean, 2015. "The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 621-644, October.
    2. Halkos, George & Paizanos, Epameinondas, 2015. "Environmental Macroeconomics: A critical literature review and future empirical research directions," MPRA Paper 67432, University Library of Munich, Germany.
    3. Jeyhun I. Mikayilov & Fakhri J. Hasanov & Marzio Galeotti, 2018. "Decoupling of C02 Emissions and GDP: A Time-Varying Cointegration Approach," IEFE Working Papers 101, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    4. repec:eee:rensus:v:80:y:2017:i:c:p:1578-1587 is not listed on IDEAS
    5. repec:eee:eneeco:v:68:y:2017:i:c:p:19-30 is not listed on IDEAS
    6. repec:eco:journ2:2017-03-15 is not listed on IDEAS
    7. repec:eee:rensus:v:76:y:2017:i:c:p:353-368 is not listed on IDEAS
    8. Kebede, Shemelis, 2017. "Modeling Energy Consumption, CO2 Emissions and Economic Growth Nexus in Ethiopia: Evidence from ARDL Approach to Cointegration and Causality Analysis," MPRA Paper 83000, University Library of Munich, Germany.

    More about this item

    Keywords

    Panel analysis; Environmental Kuznets Curve; CO2 emissions; Energy consumption;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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