CO2 emissions, economic growth and urbanisation: Insights from vector error correction modelling

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Doran, Justin
Ryan, Geraldine
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In this paper we analyse the impact of economic development and urbanisation on CO2 emissions in Ireland over the period 1970 to 2011. Using a vector error correction model and impulse response functions we pose two questions. Firstly, what role has economic development and urbanisation played in driving CO2 emissions in Ireland. Secondly, what impact might government regulations and directives which cut CO2 emissions have on future economic growth and urbanisation in Ireland. We use data from the World Bank and Penn World Tables to answer these questions. Our findings suggest that in the short run economic growth leads to higher levels of CO2 emissions but that in the long run economic growth lowers emissions. Regarding urbanisation, increasing urbanisation in Ireland has contributed to lower levels of CO2 emissions than might otherwise be observed. Our model suggests that cuts to CO2 emissions will have no impact on urbanisation but will have a negative impact on GDP.
Vector error correction model , Pollution , CO2 emissions , Impulse response analysis , Granger causality
Doran, J. and G. Ryan (2017) 'CO2 Emissions, Economic Growth and Urbanisation: Insights from Vector Error Correction Modelling'. Irish Journal of Social, Economic and Environmental Sustainability, 1(1), pp. 22-41. Available online
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