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A Cointegration Analysis of Real GDP and CO 2 Emissions in Transitional Countries

Petar Mitić (), Olja Munitlak Ivanović () and Aleksandar Zdravković ()
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Petar Mitić: Institute of Economic Sciences, Belgrade 11000, Serbia
Olja Munitlak Ivanović: Institute of Economic Sciences, Belgrade 11000, Serbia
Aleksandar Zdravković: Institute of Economic Sciences, Belgrade 11000, Serbia

Sustainability, 2017, vol. 9, issue 4, 1-18

Abstract: This paper analyses the relationship between real GDP and CO 2 emissions for 17 transitional economies based on a series of annual data from 1997 to 2014. The analysis was conducted using Dynamic Ordinary Least Squares (OLS) (DOLS) and Fully Modified OLS (FMOLS) approaches. The results clearly suggest the existence of a statistically significant long-run cointegrating relationship between CO 2 emissions and real GDP. A 1% change in GDP leads to around a 0.35% change of CO 2 emission on average for the considered group of countries. Close values of long-run coefficients for all estimations confirm the robustness of the estimated results. The authors state that transitional economies need to follow global policy incentives, and try to implement new mechanisms and instruments for the purpose of reducing CO 2 emissions, such as environmental taxes, emissions-trading schemes, and carbon capture and storage, if they want to achieve future CO 2 emission reductions, while attaining economic growth.

Keywords: real GDP; CO 2 emissions; DOLS; FMOLS; environmental degradation; economic growth; transitional countries (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2017
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