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CO2 Emissions and Economic Activity: heterogeneity across countries and non stationary series

  • Matías Piaggio

    ()

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Emilio Padilla

    ()

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

This paper explores the homogeneity of the functional form, the parameters, and the turning point, when appropriate, of the relationship between CO2 emissions and economic activity for 31 countries (28 OECD, Brazil, China, and India) during the period 1950 to 2006 using cointegration analysis. With a sample highly overlapped over time between countries, the result reveals that the homogeneity across countries is rejected, both in functional form and in the parameters of long term relationship. This confirms the relevance of considering the heterogeneity in exploring the relationship between air pollution and economic activity to avoid spurious parameter estimates and infer a wrong behavior of the functional form, which could lead to induce that the relationship is reversed when in fact it is direct.

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File URL: http://www.ecap.uab.es/RePEc/doc/wpdea1009.pdf
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Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea1009.

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Length: 44 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:uab:wprdea:wpdea1009
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