Causal relationships between carbon dioxide emissions and economic factors: Evidence from China

This study investigates the causal relationship between carbon dioxide (CO 2 ) emissions and economic factors in Chinese provinces. Then, this study undertakes a comparative analysis of the eastern, central, and western provinces using a vector autoregressive model and panel data for 1997–2015. The results show there is unidirectional causality from per capita gross domestic product (GDP) to CO 2 emissions in eastern and central provinces. Meanwhile, there is unidirectional causality from CO 2 emissions to GDP per capita in western provinces. There is unidirectional causality between CO 2 emissions to foreign direct investment in central and western provinces but no impact in eastern provinces. However, there is unidirectional causality between CO 2 emissions to export volume only in eastern provinces. Based on the results, this study concludes that to reduce CO 2 emissions, China should not only implement strict laws and regulations but should also advocate green investment, technological innovation, development of a circular economy, and sustainable development.