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CO2 Emission in Relation to Government Debt and Investment in Selected European Countries

S. M. Ziaei

Abstract



CO2 emissions and government debt are two focal, hot environmental and economics topics. This paper is the first to investigate the way in which CO2 emissions are affected by investment, particularly government debt shocks. A panel VAR (PVAR) model was employed to evaluate the relationships for 15 European countries from 1993 through to 2009. The study forms the conclusion that CO2 emissions are influenced by both investment and government debt shocks, whereas only the degree of effect differs. Investment has the most intense influence of these independent variables in CO2 emissions. Also according to the results, fiscal tightening moderately decreases CO2 emissions.

Keywords


CO2 emissions, government debt, investment, PVAR.

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