Carbon Emission Reduction, Economic Growth, and Global Spillover Effects: A GVAR Analysis

In the context of globalization, variations in carbon emission intensity and economic growth rates exhibit not only direct, reciprocal effects within individual countries but also indirect transmission mechanisms across regions and nations. Employing the Global Vector Autoregressive (GVAR) model and utilizing quarterly data from 33 countries—including 8 Eurozone members—spanning from the first quarter of 1990 to the fourth quarter of 2019, this paper demonstrates that major global economies continue to exhibit salient features of low-carbon economic development. Specifically, reductions in carbon emission intensity in developed countries frequently exert adverse spillover effects on the economic growth rates of other nations. In response to negative economic shocks, numerous countries increase their carbon emission intensity as a countercyclical measure, while others reduce emissions—potentially reflecting that they have surpassed the turning point posited by the Environmental Kuznets Curve (EKC). These findings highlight that advancing low-carbon economic development requires sustained improvements in production technologies and energy efficiency, alongside strengthened international cooperation in carbon emissions management, in order to alleviate the additional costs arising from the asynchronous progression of global carbon reduction efforts.