Co2 Emissions and GDP: Evidence from China
28 Pages Posted: 23 Oct 2019
Date Written: 2019
This paper examines the relationship between the logarithms of CO2 emissions and real GDP in China by applying fractional integration and cointegration methods. The univariate results indicate that the two series are highly persistent, their orders of integration being around 2, whilst the cointegration tests (using both standard and fractional techniques) imply that there exists a long-run equilibrium relationship between the two variables in first differences, i.e. their growth rates are linked together in the long run. This suggests the need for environmental policies aimed at reducing emissions during periods of economic growth.
Keywords: CO2 emissions, GDP, China, persistence, fractional integration, fractional cointegration
JEL Classification: C220, C320, Q560
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