DOES ECONOMIC GROWTH REDUCE OR INCREASE POLLUTION? AN EXAMINATION OF CROATIA’S SECTOR-SPECIFIC ENVIRONMENTAL KUZNETS CURVE

Leonarda Srdelic () and Radoslav Barisic ()
Additional contact information
Leonarda Srdelic: Institute of Public Finance, Zagreb
Radoslav Barisic: University of Zagreb, Faculty of Economics and Business

Economic Thought and Practice, 2025, vol. 34, issue 1, 85-105

Abstract: This paper investigates the existence of sector-specific Environmental Kuznets Curves (EKC) in Croatia from 1995 to 2021. Using Autoregressive Distributed Lag (ARDL) and Error Correction Models (ECM), the relationship between greenhouse gas (GHG) emissions and Gross Domestic Product (GDP) is analysed across key climate-policy relevant sectors (CPRS). A stable long-term relationship with significant short-term adjustments was found in the energy-intensive sector, which is regulated under the European Union Emissions Trading System (EU ETS). Long-term cointegration, but with non-significant short-term adjustments, was observed in the buildings, transportation, and utility/electricity sectors. Among sectors with a significant long-term relationship, an inverted U-shaped Environmental Kuznets Curve (EKC) – where emissions initially rise and then, after reaching a certain GDP threshold, decline – was identified in the buildings and energy-intensive sectors. In contrast, a U-shaped relationship was found in the utility/electricity sector, where emissions initially decrease but start to increase again as GDP grows. The transportation sector shows a positive linear relationship with GDP, with emissions rising consistently with economic growth, highlighting the need for targeted interventions like carbon pricing. Conversely, the fossil fuel sector shows no significant GDP-emissions relationship, pointing to external factors like geopolitical risks as primary influences.

Keywords: Environmental Kuznets Curve (EKC); greenhouse gas emissions (GHG); climate- policy relevant sectors (CPRS); European Union Emissions Trading System (EU ETS); Croatia (search for similar items in EconPapers)
JEL-codes: O11 O13 O44 Q53 Q56 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hrcak.srce.hr/index.php/clanak/479113 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:avo:emipdu:v:34:y:2025:i:1:p:85-105

Ordering information: This journal article can be ordered from
Economic Thought and Practice, University of Dubrovnik, Branitelja Dubrovnika 29, 20000 Dubrovnik
https://emip.unidu.hr/

DOI: 10.17818/EMIP/2025/9

Access Statistics for this article

Economic Thought and Practice is currently edited by Nebojsa Stojcic

More articles in Economic Thought and Practice from Department of Economics and Business, University of Dubrovnik Contact information at EDIRC.
Bibliographic data for series maintained by Nebojsa Stojcic ().