Analysis of the Determinants of CO2 Emissions: A Bayesian LASSO Approach
CO2 emissions are recognized as the main driving factor to climate change. This study applies Bayesian LASSO approach to investigate the main determinants of CO2 emissions in 56 countries from 1995 to 2014. In a multivariate framework, this study examines
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, Jianxu Liu3
, and Songsak Sriboonchitta1
1 Faculty of Economics, Chiang Mai University, Chiang Mai 50200, Thailand
[email protected] 2 School of Foreign Languages for Business, Guangxi University of Finance and Economics,
Nanning 530003, China 3 School of Economics, Shandong University of Finance and Economics, Jinan 250000, China
[email protected]
Abstract. CO2 emissions are recognized as the main driving factor to climate change. This study applies Bayesian LASSO approach to investigate the main determinants of CO2 emissions in 56 countries from 1995 to 2014. In a multivariate framework, this study examines two hypotheses, including Environmental Kuznets curve (EKC) hypothesis and Pollution haven hypothesis (PHH). The sample is divided into two subperiods to compare the different determinants of CO2 emissions before and after Kyoto Protocol came into effect in 2005. The results show that CO2 emissions are mainly affected by energy consumption while using renewable energy and public transportation can reduce CO2 emissions. Although economic development and urbanization are two factors opposite to the demand of emission reduction, technology and international trade, as well as international political cooperation, can mitigate CO2 emissions. Education has a positive impact before 2005 and become negative on CO2 emissions after 2005, which supports the EKC hypothesis, but no strong evidence for the PHH. Keywords: CO2 emissions · Bayesian LASSO · Energy consumption
1 Introduction For the past several decades, there exists a broad consensus among countries worldwide that climate change is caused by environmental degradation. The pollution produced by humans is mainly from the combustion of fossil fuels to improve living standards. Therefore, governments confront with the challenge between the energy consumption and economic growth. New economies emerged since 1990s. Their quick growths have been driven by the soaring demand in energy consumption, causing a rapid increase in CO2 emissions (Apergis and Payne 2010). Although these new economies take the rapid pace of the development, most of them have not yet finished the task of urbanization industrialization. In the future years, they will face the pressure to reduce CO2 emissions. Numerous hypothetical investigations formally model an immediate connection between energy and development. The principal viewpoint of the pollution haven hypothesis (PHH) is that dirty industries from industrialized countries damage natural ecology © Springer Nature Switzerland AG 2020 V.-N. Huynh et al. (Eds.): IUKM 2020, LNAI 12482, pp. 225–237, 2020. https://doi.org/10.1007/978-3-030-62509-2_19
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in developing countries (Taylor 2004). But the so-called PHH effect yields contradictory results. Some scholars have provided the evidence that international trade from the developed countries to developing countries has increased global CO2 emissions. On the contrary, other researchers have found that international trade slows down the emissions, as the improved e
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