Title: A simultaneous evolution for analysing the interactions between CO₂ emissions and national income

Authors: Cheng-Min Chuang; Chih-Chuan Yeh

Addresses: Department of International Business, National Taiwan University, Taiwan ' Department of Finance, Overseas Chinese University, 100 Chiao-Kwang Road, Taichung 407, Taichung County, Taiwan; Department of International Business, National Taiwan University, Taiwan

Abstract: In this paper, we estimate the causal interrelationships between growth and CO₂ emissions within a simultaneous equations framework and obtain identification using a novel heteroskedasticity-based method. After the removal of the bias, we find that per capita GDP and CO₂ emissions are strongly interrelated. Moreover, we split our dataset into high-income, middle-upper-income and low-income countries, and the results indicate that the beneficial effect of per capita GDP on CO₂ emissions in high-income panel countries is greater than that in middle-upper panel countries. However, quicker economic development induces higher pollution in low-income countries. On the other hand, the effect of CO₂ emissions results in the improvement of per capita GDP for the low to middle-upper income panel but a decrease in the improvement of per capita GDP for the high-income countries.

Keywords: simultaneous equations model; CO₂ emissions; energy consumption; endogenous bias.

DOI: 10.1504/IJSHC.2018.095013

International Journal of Social and Humanistic Computing, 2018 Vol.3 No.1, pp.61 - 75

Received: 17 Feb 2018
Accepted: 25 Mar 2018
Published online: 28 Sep 2018 *