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CO2 emissions and human development in OECD countries: granger causality analysis with a panel data approach

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Abstract

Carbon dioxide (CO2) is a major greenhouse gas emitted through human activities resulting from energy use. This study examines the causal relation between the logarithms of the human development index and CO2 emissions in 33 Organization for Economic Co-operation and Development countries for 1992–2011. Moreover, it applies a new panel data approach developed by Konya (2006). This approach is based on the seemingly unrelated regression system and Wald tests with country-specific bootstrap critical values. The results obtained from the Granger causality analysis support the growth hypothesis for Denmark, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Poland, Spain, Slovakia, Turkey, and the U.S. In addition, they support the conservation hypothesis for Chile, Czech Republic, Estonia, Finland, France, Greece, New Zealand, and Mexico. The feedback hypothesis is observed for Iceland, Norway, Portugal, and Switzerland as well as the neutrality hypothesis of the other countries (Australia, Austria, Belgium, Canada, Hungary, Netherlands, Slovenia, Sweden, and the UK). This implies that conservation policies that are related to coal, gas, electricity, and oil consumption can reduce CO2 emissions but may simultaneously hinder economic growth and human living standards. However, if conservation policies are not implemented, the detrimental effects of environmental degradation could also affect human living standards. Therefore, policymakers must develop strategic plans to reduce carbon emissions that do not negatively impact their constituents. One possible way to achieve this is by increasing the efficiency of energy use.

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Acknowledgments

We are grateful to anonymous reviewers for their constructive and valuable comments that helped us to improve the paper. We also would like to thank Laszló Kónya and Şaban Nazlıoğlu for providing us with TSP codes.

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Authors and Affiliations

  1. Erzurum Technical University, Erzurum, Turkey

    Serap Bedir & Vildan Merve Yilmaz

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  1. Serap Bedir
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  2. Vildan Merve Yilmaz
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Correspondence to Serap Bedir.

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Bedir, S., Yilmaz, V.M. CO2 emissions and human development in OECD countries: granger causality analysis with a panel data approach. Eurasian Econ Rev 6, 97–110 (2016). https://doi.org/10.1007/s40822-015-0037-2

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  • DOI: https://doi.org/10.1007/s40822-015-0037-2

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