Asymmetric Impact of Economic Growth on CO2 Emissions: Evidence from the EU Countries

The paper examines asymmetric responses of CO2 emissions to changes in GDP through the use of the VAR model considered for two specifications: linear and asymmetric in the EU countries divided into three groups with regard to the Knowledge Economy Index. Granger causality tests, the impulse response function and forecast error variance decomposition suggest that the GDP shocks have asymmetric effects on CO2 emissions in Belgium and Spain. Some weaker evidence are also found for France, Portugal and Germany. The evidence that the response of CO2 emissions to GDP shocks is procyclical or even asymmetric for some EU countries indicates that policy makers should also respond to this by altering the stringency of a policy.