The dynamic links between carbon dioxide (CO2) emissions, health spending and GDP growth: A case study for 51 countries

Abstract

This document investigated the causal relationship between carbon dioxide (CO2) emissions, health spending and GDP growth for 51 countries (divided into three groups of countries: low-income countries; group of countries with lower and upper middle income; group of middle income countries) covering the annual period 1995–2013. Dynamic simultaneous-equations models and generalized method of moments (GMM) are used to investigate this relationship. The main results provide evidence of a causal relationship between the three variables. The empirical results show that there is a bidirectional causality between CO2 emissions and GDP per capita, between health spending and economic growth for the three groups of estimates. The results also indicate that there is a unidirectional causality from CO2 emissions to health spending, except low income group countries. We found that health plays an important role in GDP per capita; it limits its effect on a growing deterioration in the quality of the environment.