A Dynamic Analysis of CO2 Emissions and the GDP Relationship: Empirical Evidence from High-income OECD Countries

Abstract

A positive relationship between carbon dioxide (CO2) emissions and gross domestic product (GDP) is shown in this article; examining the per capita income and CO2 emissions of 20 high-income countries for 1961-2004. It also appears that there is a positive relation from GDP to CO2 except for Norway. While we found the coefficients for individual countries to be from 0.27-1.73, the panel varies from 0.70-1.03 in terms of time dummies effect. On the other hand, when we examine dynamic ordinary least squares (DOLS) estimates, the results are in the line with fully modified ordinary least squares (FMOLS) estimates. The panel FMOLS test results in average illustrate that a 1% increases in GDP causes a 0.86% rise in CO2 emission whereas a 1.07% increase is found from DOLS.