Abstract
This study investigates the effect of climate change on economic growth. In the study, it has been used over the period from 1996 to 2014 for EU-28 countries. We applied endogeneity, cross-sectional dependence and slope homogeneity tests. Then, we used panel unit-root and panel cointegration tests. Estimated random coefficient panel regression results show that increasing carbon emission contributes to economic growth in North and East Europe regions countries, relatively cold side. In South-West Europe countries, coefficient of CO2 is insignificant. Increasing carbon emission positively effect on economic growth through especially agricultural and tourism sector outputs in North and East Europe regions.
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