Modelling the CO2 emissions and economic growth in Croatia: Is there any environmental Kuznets curve?

This paper investigates the existence of environmental Kuznets curve in Croatia for the period of 1992Q1-2011Q1. To fulfil to goals of the paper, Autoregressive Distributed Lag (ARDL) and VECM method has been applied. Results show the existence of inverted U-shape relation between CO2 emissions and economic growth in long run that is the validity of EKC. Granger causality based on VECM approach shows bi-directional causality between CO2 emissions and economic growth in short run and uni-directional causality from economic growth to CO2 emissions in long run. DOLS and FMOLS results confirm the robustness of long run results. Variance decomposition and Impulse response also show similar results. Beauty of the paper is the consistency of results from different techniques.