Analyzing the causalities between economic growth, financial development, international trade, tourism expenditure and/on the CO₂ emissions in Greece

ABSTRACT

This paper investigates the dynamic causalities between economic growth, financial development, international trade, tourism expenditure and/on the CO₂ emissions in Greece over the period of 1970–2014. For this purpose, the Zivot-Andrews unit root tests and the Autoregressive-Distributed Lag (ARDL) models were applied. The Vector Error Correction Model (VECM) and the robustness of causality test results indicate that Greece’s economic growth, financial development, international trade, tourism expenditures, and CO² emissions are co-integrated in the long run. The empirical findings show that economic growth, financial development, international trade, and tourism expenditures caused increases in Greece’s CO₂ emissions. It should be noted that tourism, as a leading sector in the Greek economy, has serious negative environmental impacts for Greece in the long run. Therefore, the policy makers of Greece should strongly take into consideration this threat from the tourism sector as the whole Greek economy is dominated by this one sector.

KEYWORDS:

• CO₂ emissions
• economic growth
• financial development
• Greece
• international trade
• tourism expenditures