Abstract: This paper investigates whether the inequality has a role in the relationship between CO2 emissions and GDP on a panel dataset of European NMS (New Member States) in the period from 1990 to 2021. Using Common Correlated Effects Estimator-Mean Group for error-correction model estimation method based on Chudik and Pesaran (2015) and Pesaran (2006) that allows for slope heterogeneity in the short and long run, the results indicate that: i) on short-run per capita income and also financial development increase CO2 emissions, (ii) on the long-run GDP also increase pollution, but that there is relative decoupling and for positive economic growth and increased inequality the effect on pollution is more pronounced, (iii) the impact of renewable energy consumption on CO2 emissions is significantly negative in the long run, but not in the short run.

Keywords: CO2 Emissions; Inequality; Panel Data Analysis

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