Macroeconomic Factors' Impact on Sweden’s CO2e Emissions - A Multiple Linear Regression Analysis

Abstract: This study investigated the relationship between Sweden’s CO2e (Carbon Dioxide Equivalent) emissions and key macroeconomic factors, for the period 2008Q1- 2022Q3. The aim was to enhance the understanding of the link between macroeconomic factors and greenhouse gas emissions in a post-industrial economy, using multiple regression analysis. The study identified several significant macroeconomic factors affecting CO2e emissions and examined the extent to which these variables explain the fluctuations in Sweden’s emissions. Additionally, the study assessed the validity of the Environmental Kuznets Curve and Porter Hypothesis within Sweden’s environmental context. In the study, two multiple regression models were developed. Model 1 had an R^2 of 0.90, using the macroeconomic variables Industry Fuel Consumption, Population, Net Export, and Oil Prices. However, since the first model displayed moderate autocorrelation, a second model was also built by introducing a lagged dependent variable which yielded an R^2 of 0.92.