Long-Term US Economic Growth and the Carbon Dioxide Emissions Nexus: A Wavelet-Based Approach

Abstract

Economic growth has significantly boomed carbon emissions in the global economy. However, there is an ongoing debate about the economic growth–carbon emission nexus for various economies in the literature. This paper investigates the short/long-term causal information flow between fossil-fuel-related carbon dioxide emissions (CO2) and economic growth (GDP) in the US economy spanning from 1800 to 2014. Using wavelet-based-nonparametric Granger causality analysis, the empirical results indicate that (i) the long-run causal information flow running from GDP to CO2 is positive, strong, uninterrupted and concentrated since the 1990s; (ii) the reverse causality is positive but interrupted, short-term and intensifying during the early 1990s. Due to strong and very long-term unidirectional causality findings, economic growth leads to environmental deterioration. Hence, for policymakers, environment-based growth policies and structural reforms can foreshadow energy-efficient policies by limiting carbon emissions. Hence, sustainable economic growth policies are expected to decelerate environmental problems and promote environmental sustainability. The findings can be attractive for other booming economies.

An autoregressive distributed lag approach for estimating the nexus between CO2 emissions and economic determinants in Pakistan

“…GDP growth rate was positively associated with CEs, increasing it by 0.2689 metric tons per capita for every one percent (1%) increase in growth. Our findings confirm the results of [ 37 , 38 , 40 ].…”

“…They emphasised that this long-run connection reaches an equilibrium when the factors are differenced ones. Torun et al [ 38 ] with the application of wavelet-based technique showed that CO 2 emissions and GDP growth have a positive interrupted short-term and strong unidirectional long-run relationship, thereby, specifying that economic growth propels environmental destruction. Wu et al [ 39 ] used the index of logarithmic mean divisia with the decoupling Tapio model to establish that CO 2 emissions peaks take into account air quality, path, and time in the transportation sector.…”

Correlation of Greenhouse Gas Emissions with Economic Growth in the European Union (2010-2019)

“…One paper examines the short/long-term causal information flow between fossil fuel-related carbon dioxide (CO 2 ) emissions and economic growth (GDP) in the US economy between 1800 and 2014. The empirical results show that (i) the long-run causal information flow from GDP to CO 2 is positive, strong, uninterrupted, and concentrated until the 1990s; (ii) the reverse causality is positive but interrupted, short-run, and intensifies from the early 1990s (Torun et al, 2022).…”