Vector Autoregressive Analysis of Economic Growth, International Trade and Environment in Iran

Sharifi-Renani, Hossein
January 2011
International Proceedings of Economics Development & Research;2011, Vol. 2, p155
Academic Journal
A most significant cause of pollution is the diffusion of carbon-dioxide due to industrial production. In the past few decades, the production and export of industrial products which are mostly constituted by pollution-causing goods have enhanced economic growth in various countries. On the other hand, with the increase of national income and an increasing demand for less pollution, certain regulations have been implemented by governments limiting the manufacture and export of industrial products. The aim of this study is to determine the relation between economic growth, international trade and environmental regulations in Iran during the period 1990Q1-2006Q4. Therefore, using the vector Autoregressive approach, the effects of each of these elements in relation to the others was systematically studied. Results showed that economic growth has enhanced carbon-dioxide diffusion, whereas export has not had any effect. It was also determined that environmental regulations induced a decrease in production, export and carbon-dioxide diffusion with the effect on Co2 diffusion being negligible. It can, therefore, be concluded that in Iran the income resulting from economic growth and exports and the implementation of environmental regulations has not been effective in terms of a significant decrease in the pollution of the environment.


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