How Does Economic Growth Affect Environmental Damages? Evidence From Country-Level Panel Data

Abstract

The environmental effects of economic growth are a new topic of discussion in economics. Social media has been a large part of the rapidly increasing concern for our environment. How do us as consumers play a role in the long-term effect environmental damage could have on our planet? We have seen a large increase in average temperature and carbon dioxide emissions in the past 50 years. This is largely due to the increase in consumption of goods by consumers, increase in population and increase in international trade. Having an economy that is continuously growing, how much are we damaging our environment? Is there a possibility that this increase in our economy could eventually save our environment as technology continues to increase? Continuous economic growth can create long term environmental damage that is irreversible. Using regression analysis the following study will determine the relationship between environmental damage, using CO2 emissions and economic growth, using gross domestic product, GDP. The findings of this study include a negative relationship when the model is linear and an inverted U shape relationship when the model is quadradic. Therefore, dismissing the hypothesized positive linear relationship of the Daly Curve and affirming the inverted U shape of the Kuznets Curve.