An Empirical Study of the Relationships Between CO2 Emissions, Economic Growth and Openness

29 Pages Posted: 14 Nov 2010

See all articles by Eunho Choi

Eunho Choi

affiliation not provided to SSRN

Almas Heshmati

Sogang University; Jönköping International Business School

Yongsung Cho

affiliation not provided to SSRN

Abstract

This paper investigates the existence of the environmental Kuznets curve (EKC) for carbon dioxide (CO2) emissions and its causal relationships with economic growth and openness by using time series data (1971-2006) from China (an emerging market), Korea (a newly industrialized country), and Japan (a developed country). The sample countries span a whole range of development stages from industrialized to newly industrialized and emerging market economies. The environmental consequences according to openness and economic growth do not show uniform results across the countries. Depending on the national characteristics, the estimated EKC show different temporal patterns. China shows an N-shaped curve while Japan has a U-shaped curve. Such dissimilarities are also found in the relationship between CO2 emissions and openness. In the case of Korea and Japan it represents an inverted U-shaped curve, while China shows a U-shaped curve. We also analyze the dynamic relationships between the variables by adopting a vector auto regression or a vector error correction model. These models through the impulse response functions allow for analysis of the causal variable's influence on the dynamic response of emission variables and it adopts a variance decomposition to explain the magnitude of the forecast error variance determined by the shocks to each of the causal variables over time. Results show evidence of large heterogeneity among the countries and variables impacts.

Keywords: carbon dioxide (CO2), environmental Kuznets curve (EKC), economic growth, free trade, development

JEL Classification: C32, F18, F43, N55, O13, Q56

Suggested Citation

Choi, Eunho and Heshmati, Almas and Cho, Yongsung, An Empirical Study of the Relationships Between CO2 Emissions, Economic Growth and Openness. IZA Discussion Paper No. 5304. Available at SSRN: https://ssrn.com/abstract=1708750

Eunho Choi (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Almas Heshmati

Sogang University ( email )

Seoul 121-742
Korea, Republic of (South Korea)
0082-2-705-8771 (Phone)

HOME PAGE: http://www.sogang.ac.kr/english/academic/03_under_0123.html

Jönköping International Business School ( email )

Jönköping, 551 11
Sweden

Yongsung Cho

affiliation not provided to SSRN

No Address Available

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