Economic Growth, CO2 Emissions and Energy Use in the South Caucasus and Turkey: a PVAR analyses

Abstract

The scope of the paper is to investigate the relationship among economic growth, carbon dioxide emissions and energy use for the South Caucasus area and Turkey in the 1992-2013 years. We estimate a 3-variable Vector AutoRegressions using a panel VAR technique. Empirical results show that the response of CO₂ emissions to energy use is negative and statistically significant in both the estimated coefficients and impulse responses. Moreover, the first lag of CO₂ (with a negative coefficient) is statistically significant in the real GDP equation. Instead, the energy use is only positively affected by its own lags. The forecast errors in real per capita GDP are mainly due to uncertainty in GDP itself and (marginally) in energy use emissions. The error variances in the carbon dioxide emissions are sensible to disturbances in all three equations. While the errors in predicting the energy use are sensitive to disturbances in its own equation. Thus, for the estimated sample, these results reinforced the VAR and IRFs analyses, suggesting that the “neutrality hypothesis” holds.