Macroeconomic analysis of road vehicles related environmental pollution in Hungary

Abstract

The article aims to examine the relationship between road transport and macro economy, especially the use of fossil energy in transport sector. Nowadays environmental pollution is a key issue on the EU level as well as in Hungary. Lots of effort have been already done in order to decrease emissions in road transport, but a lot more need to be done. The article aims to prove that the only possible solution is technological innovation in order to reach emission reduction target without decline of the GDP. The basic idea is to ensure sustainable development, to decrease environmental pollution in road transport without harming the economy. In the EU and in Hungary road vehicles are powered by fossil fuelled internal combustion engines. This paper aims to analyse the role of the fossil fuel-based road transport sector within the economy with the usage of constant elasticity substitution (CES) production functions. Authors have built CES production function for Hungary. Parameters were calculated based on the validated model.