CO2, SO2 and economic growth: a cross-national panel study

In the literature on climate change, it is well established that CO2 is a major greenhouse gas (GHG) and SO2 is a significant atmospheric cooling aerosol. Previous studies have tended to focus on the relationship between CO(2 )emissions and measures of economic growth in the process of global warming. This study includes SO2 in an econometric analysis of the relationship between annual percent growth in CO2 and SO2 emissions and real GDP for a panel of 12 major industrial economies over 54 annual time periods from 1961-2014. Our study updates and extends previous studies by examining annual percent changes in CO2 and SO2 emissions across economic Expansions and Contractions, convergence of CO2 and SO2 emissions, the Granger causal linkages between CO2, SO2 and real GDP and testing the fit of the EKC, all in a single study. We conclude with some cautions for analysts and policy makers regarding the use of panel data and Granger causality tests in climate economics studies, and some policy-making implications of our results.