The Causality between Quality environment, Income and Openness in Oil Exporting Countries: Panel Cointegration and Causality

This paper investigates the causal relationship between CO2 emissions and GDP in a panel of 11 selected oil exporting countries by using panel unit root tests and panel cointegration analysis for the period 1970-2011. A three-variable model is formulated with openness as the third variable. The results suggest that there is a long-run relationship between these variables. CO2 emissions have a positive long-run relationship with per capita income as well as openness, indicating economic growth tends to worsen environmental quality. The Granger Causality test indicates strong unidirectional effects from GDP and openness to CO2 emissions.