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Production technology and carbon emission: long-run relation with short-run dynamics

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  • Soumyananda Dinda

Abstract

Using a vector error correction model, this paper investigates the long-run relation with short-run dynamics among CO2 emission, technological progress and economic growth. It observes a specific kind of causality running from technological progress to reduction of CO2 emission in the United States during 1963–2010, while past income generation is the cause of rising carbon emission. Policy makers should emphasise R&D for updated production technology, while raising income helps to reduce CO2 emission. Technological progress is the central force that causes income growth as well as emissions’ reduction. Continuous change and adaption of new and updated technology is the main driving force towards sustainable development.

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  • Soumyananda Dinda, 2018. "Production technology and carbon emission: long-run relation with short-run dynamics," Journal of Applied Economics, Taylor & Francis Journals, vol. 21(1), pages 106-121, January.
    • Handle: RePEc:taf:recsxx:v:21:y:2018:i:1:p:106-121
    DOI: 10.1080/15140326.2018.1526871
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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