Economic Growth, CO 2 Emissions Quota and Optimal Allocation under Uncertainty

Chiu-Ming Hsiao
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Chiu-Ming Hsiao: Department of Finance, College of Management, National Yunlin University of Science & Technology, Yunlin 64002, Taiwan

Sustainability, 2022, vol. 14, issue 14, 1-26

Abstract: This study attempts to link greenhouse gas emissions and economic development, and under the premise of considering economic development, proposes an optimal quota of greenhouse gas emissions. Based on the environmental Kuznets curve hypothesis, the logarithmic value of greenhouse gas emissions is an inverted U-shaped function of the logarithmic value of GDP per capita. The empirical results showed that most countries in the world support the Kuznets curve hypothesis. Moreover, using data collected from Our World in Data, the optimal allocation of a greenhouse gas emissions quota can be found by minimizing the uncertainty risk subject to a prespecified global economic growth rate. For government policymakers, they may apply the framework in this study to determine an optimal allocation of greenhouse gas emissions for each sector that will ensure the intended level of domestic economic growth.

Keywords: greenhouse gases; CO 2 emission equivalent; environmental Kuznets curve; modern portfolio theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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