An Empirical Study of the Relationships between CO2 Emissions, Economic Growth and Openness

Eunho Choi (), Almas Heshmati () and Yongsung Cho ()
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Eunho Choi: Korea University
Yongsung Cho: Korea University

No 5304, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the existence of the environmental Kuznets curve (EKC) for carbon dioxide (CO2) emissions and its causal relationships with economic growth and openness by using time series data (1971-2006) from China (an emerging market), Korea (a newly industrialized country), and Japan (a developed country). The sample countries span a whole range of development stages from industrialized to newly industrialized and emerging market economies. The environmental consequences according to openness and economic growth do not show uniform results across the countries. Depending on the national characteristics, the estimated EKC show different temporal patterns. China shows an N-shaped curve while Japan has a U-shaped curve. Such dissimilarities are also found in the relationship between CO2 emissions and openness. In the case of Korea and Japan it represents an inverted U-shaped curve, while China shows a U-shaped curve. We also analyze the dynamic relationships between the variables by adopting a vector auto regression or a vector error correction model. These models through the impulse response functions allow for analysis of the causal variable's influence on the dynamic response of emission variables and it adopts a variance decomposition to explain the magnitude of the forecast error variance determined by the shocks to each of the causal variables over time. Results show evidence of large heterogeneity among the countries and variables impacts.

Keywords: development; carbon dioxide (CO2); free trade; environmental Kuznets curve (EKC); economic growth (search for similar items in EconPapers)
JEL-codes: C32 F18 F43 N55 O13 Q56 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-11
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Published - published in: Korean Journal of Environmental Policy 2011, 10(4), 3-37.

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