Greenhouse Gas Emissions and GDP Growth: Assessing the Economic Impact of Climate Change and Renewable Energy Transitions
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Date
2024-05-27Author
Zamba, NikiAdvisor
Ziros, NicholasPublisher
Πανεπιστήμιο Κύπρου, Σχολή Οικονομικών Επιστημών και Διοίκησης / University of Cyprus, Faculty of Economics and ManagementGoogle Scholar check
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Climate change represents a significant global challenge as rising Greenhouse Gas (GHG)
emissions lead to increasing temperatures and shifts in precipitation patterns, directly
impacting economic outcomes. This thesis examines the effects of Carbon Dioxide (CO₂)
emissions on Gross Domestic Product (GDP) growth, as well as the economic response to
transitions to renewable energy. The study utilizes fixed effects and random effects panel
regressions to analyse data from 23 countries between 1990 and 2020. The Hausman test
determined that the fixed effects models are the most suitable for this dataset. The results
indicate that a 1°C increase in mean temperature reduces GDP growth by 0.46 percentage
points, while there is not statistically enough evidence that mean precipitation affects GDP
growth. Additionally, a 1 percentage point increase in renewable energy consumption results
in a 0.091 percentage points decrease in GDP growth. These findings underscore the
importance of adaptive policies that balance economic growth with environmental
sustainability.