Economic Growth and Air Pollution Dynamics: The Case of Canada
Keywords:Air Pollution, CO2 Emissions, Economic Growth, Sustainable Growth
The root cause of the most important issues facing humanity today could be traced back to environmental mismanagement or inequality. Thus, the aim of this paper is to examine the dynamic relationship between economic growth and air pollution in Canada using cointegration tests, vector error correction models and causality tests on annual data from 1960 to 2014. The cointegration tests reveal that there is a long-run relationship between economic growth, trade and air pollution in Canada. The results also show that in the long-run, economic growth and trade respectively have a positive and a negative impact on air pollution. The vector error correction models reveal that the coefficient associated with the error correction term is negative and significant. This means that, any shock disturbing the long-run equilibrium between economic growth, trade and air pollution will be corrected at a speed of 10 percent per year. As for the causality analyses, they show that economic growth does not cause air pollution in Canada.
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