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Are we moving towards decarbonisation of the global economy? Lessons from the distant past to the present

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  • Muhammad Shahbaz
  • Vassilios G. Papavassiliou
  • Amine Lahiani
  • David Roubaud

Abstract

This study adds to the literature on decarbonisation of the global energy system. We employ a detailed and long dataset that covers a period of nearly two centuries for the G7 countries. We link the scale of economic activity to the notion of environmental quality and employ nonlinear Autoregressive Distributed Lag Models that take into account the presence of structural breaks in our series. Moreover, we apply linear Granger causality tests as well as the Hatemi‐J nonlinear causality test to further gauge asymmetries between economic growth and CO2 emissions. Our results are encouraging and point to the significant progress that has been made toward sustainable development. Along these lines, we identify a number of policy implications following a low‐carbon transition that result in enhanced economic growth and competitiveness of energy‐intensive industries.

Suggested Citation

  • Muhammad Shahbaz & Vassilios G. Papavassiliou & Amine Lahiani & David Roubaud, 2023. "Are we moving towards decarbonisation of the global economy? Lessons from the distant past to the present," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2620-2634, July.
    • Handle: RePEc:wly:ijfiec:v:28:y:2023:i:3:p:2620-2634
    DOI: 10.1002/ijfe.2553
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