Econometric Analysis of Influences of Trade Openness, Economic Growth and Urbanization on Greenhouse Gas Emission in INDIA (1961-2017)

Abstract

This paper examines the impacts of trade openness, gross domestic product (GDP) per capita, and urbanization air pollution. It takes into consideration data on India during the period 1961-2017 to see how trade openness, GDP per capita growth, urbanization have impacted CO2 emissions. To test for the existence of an inverted U shaped hypothesis, U-test is used in this paper. The data is subjected to various econometric tests, including unit root test, optimal lag test before applying the Johansen test for co-integration to understand the long-run relationship between the above variable. Then the unrestricted VAR model and Wald test are used to find the short-run causality between the variables under analysis. Further, to observe variation in an endogenous variable into the component shocks to the VAR, variance decomposition of the CO2 emission is observed.