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A Re-examination of the Empirical Relationship between Economic Growth and Air Pollution

Kyriacos Aristotelous

Abstract



The paper investigates the relationship between economic growth and air pollution measured by CO2 emissions per capita using unbalanced panel data sets from 1961 to 2010 for different country groupings. The results suggest that the relationship between economic growth and air pollution depends on a country’s level of economic development. For HICs only, there exists an EKC relationship between real per capita income and CO2 emissions per capita. The turning point is estimated to be $24,883 or $23,350 (constant 2000 US$) depending on whether a fixed-effects or random-effects estimation model is used in the analysis. In the case of UMICs, LMICs, and LICs, there is a monotonically increasing relationship between real per capita income and CO2 emissions per capita. For all country groupings, the results also suggest that energy consumption per capita and industry output as a percentage of GDP have a positive and statistically significant impact on CO2 emissions per capita, whereas the real price of crude oil has a negative and statistically significant effect on CO2 emissions per capita. The impact of trade openness and population density on CO2 emissions per capita is found to be mixed. That relationship depends also on a country’s level of economic development

Keywords


Economic Growth, Air Pollution, CO2 Emissions.

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