The impact of CO2 emissions and climate on economic growth and productivity: International evidence

Abstract

In this study, we apply a detailed country level data in the 1961–2015 period to investigate the relationship between weather variables, CO2, share of renewable energy sources, gross domestic product, and total factor productivity in a standard Cobb–Douglas production function by using an instrumental variable approach. Our findings suggest that economic growth has been positively affected by temperature and CO2 emissions, while climate vulnerability varies significantly between rich-poor countries. Furthermore, the negative nexus between renewable sources and CO2 emissions demonstrates its importance for optimal environmental policies design while an inverted U-shaped relationship for temperature and emissions.