Linkage Between Pollution and Growth: The Role of Inequality

Corina Sâman (), Bianca Păuna () and Alina Mirela Stănică ()
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Corina Sâman: Institute for Economic Forecasting, Romanian Academy. Corresponding author
Bianca Păuna: Centre for Macroeconomic Modelling, NIER, Romania.
Alina Mirela Stănică: Phd Student Bucharest Academy of Economic Studies, Romania.

Journal for Economic Forecasting, 2024, issue 2, 146-157

Abstract: This paper investigates whether inequality plays a role in the relationship between CO2 emissions and GDP on a panel dataset of European NMS (New Member States) over the period 1990-2021. For the analysis, we employ Common Correlated Effects Estimator-Mean Group for error-correction model estimation method based on Chudik and Pesaran (2015) and Pesaran (2006) which allows for slope heterogeneity in the short and long run. The results indicate that: i) on short-run per capita income, (ii) on the long-run GDP also increase pollution, but there is relative decoupling present and for positive economic growth and decreased inequality the effect on pollution is more pronounced, (iii) the impact of renewable energy consumption on CO2 emissions is significantly negative in the long run, but not in the short run. The main result is that countries cannot simultaneously improve environmental quality (reduce CO2 emissions), maintain economic growth and increase equality. These results contribute to the field of explaining the evolution of environmental quality in the context of the type of growth-inequality relationship.

Keywords: CO2 Emissions; Inequality; Panel Data Analysis (search for similar items in EconPapers)
JEL-codes: C21 C52 Q56 (search for similar items in EconPapers)
Date: 2024
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