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.