Spatial Econometrics Applications to Investigate Distribution of CO2 Emission in Europe

by Albu, Lucian-Liviu  
Published in Romanian Journal of Economic Forecasting, volume 8 issue1, 2007

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Over the last decade economists were more and more concentrated on studying the impact of the greenhouse effect on economy. At the same time, they tried to find solutions to stop the CO2 emissions into the atmosphere and, implicitly, to make changes in the structure of energy production and consumption. This challenge forced them to use new models and methods in order to estimate more accurately the future economic development. Among the special tools, the so-called spatial econometrics begun to be used for studying, for example, the distribution of gas emissions in extended geographical zones, but also to quantify their implication at the macroeconomic level. Using available data, in this study we try to build a simple model dedicated to estimate on medium and long terms some likely major changes in the macroeconomic correlations under the circumstances of increase in the total quantity of CO2 emissions in the atmosphere and how that will influence the economic growth in the future. Certainly, under the unchanged actual technological conditions the growth rate of the economies in Europe or even worldwide could be dramatically affected at least in the long run by stronger restrictions on CO2 emission and on its corollary - production and consumption of energy resources.

Keywords: Spatial Econometrics, CO2 Emission, Three-Dimensional Map, Contour Plot, Distribution
JEL Classification: C46, E17, O11, Q43, Q54