A Cointegration Analysis of Real GDP and CO2 Emissions in Transitional Countries.

This paper analyses the relationship between real GDP and CO₂ emissions for 17 transitional economies based on a series of annual data from 1997 to 2014. The analysis was conducted using Dynamic Ordinary Least Squares (OLS) (DOLS) and Fully Modified OLS (FMOLS) approaches. The results clearly suggest the existence of a statistically significant long-run cointegrating relationship between CO₂ emissions and real GDP. A 1% change in GDP leads to around a 0.35% change of CO₂ emission on average for the considered group of countries. Close values of long-run coefficients for all estimations confirm the robustness of the estimated results. The authors state that transitional economies need to follow global policy incentives, and try to implement new mechanisms and instruments for the purpose of reducing CO₂ emissions, such as environmental taxes, emissions-trading schemes, and carbon capture and storage, if they want to achieve future CO₂ emission reductions, while attaining economic growth. [ABSTRACT FROM AUTHOR]