Relationship between Trade Openness and Carbon Emission: A Case of Bangladesh

M. Zillur Rahman

Journal of Empirical Economics, 2013, vol. 1, issue 4, 126-134

Abstract: This study attempts to empirically test the causality between trade openness and carbon dioxide emission in Bangladesh context applying time-series econometric techniques covering 1972-2009 periods. The author tests this interrelationship in a vector autoregressive (VAR) framework followed by Granger causality, impulse response function to find the plausible causal relationship, direction of causality and the likely impact of one variable on the other. The VAR was tested for its stability also. The Granger causality analysis finds inconclusive causal relationship between variables. But the impulse response function derived through the stable unrestricted VAR model resulted in significant impact of trade liberalization on carbon emission but not any in the reverse order. This study is important for policy makers of Bangladesh and the countries alike.

Keywords: Causality; vector autoregressive; trade openness; CO2 emission (search for similar items in EconPapers)
Date: 2013
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