Energy use, CO2emissions and economic growth – causality on a sample of SEE countries

Abstract

The primary aim of this study is to examine the causal relations between energy use, CO2emissions and economic growth, using the examples of Greece and Bulgaria. The empirical evidence on South Eastern Europe (SEE) considering this research is quite sparse, so there is merit in the analysis of the paper. Vector Error Correction model with annual data from 1980 to 2010 has been used in order to determine potential causality between the variables. The empirical findings indicate that, in the long run there is causality from energy and CO2emissions to economic growth in both countries. In the short run, there is no causality between energy and economic growth neither on Greece nor on Bulgaria. Based on the results of the analysis certain recommendations can be presented considering energy policy in the long run, through the orientation to saving energy could have negative impact on economic growth.