Beyond the Turning Point: The Environmental Kuznets Curve for CO2 Emissions in Romania
Abstract: This thesis studies the long-run relationship between environmental degradation measured by carbon dioxide (CO2) emissions per capita and economic growth measured by gross domestic product per capita in Romania, between 1968 and 2018. The study is conducted using the environmental Kuznets curve (EKC) framework and the autoregressive distributed lag bounds test for cointegration. Furthermore, the direction of short-run and long-run causality is investigated using the Granger causality within the Vector Error Correction Model. The EKC hypothesizes the existence of an inverted U-shaped relationship between environmental degradation and the level of income. The analysis lends support to this hypothesis for Romania in the studied time frame and identifies a peak of CO2 emissions at a real GDP per capita of approximately $5,700. This suggests that a green growth strategy is suitable for Romania at this point in time. However, the situation should be constantly monitored and efforts to reduce emissions ought to be maintained to reach the net zero targets.
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