CO2 emissions, GDP and trade: a panel cointegration approach

Abstract

ABSTRACTThis paper examines the relationships among per capita CO2 emissions, per capita GDP and international trade based on panel data spanning the period 1960–2008 for 150 countries. A distinction is also made between OECD and non-OECD countries to capture the differences of this relationship between developed and developing economies. We apply panel unit root and cointegration tests and estimate a panel error correction model. The results from the error correction model suggest that there are long-term relationships between the variables for the whole sample and for non-OECD countries. Finally, Granger causality tests show that there is bidirectional short-term causality between per capita GDP and international trade for the whole sample and between per capita GDP and CO2 emissions for OECD countries.