The dynamic links between carbon dioxide (CO₂) emissions, health spending and GDP growth: A case study for 51 countries

This document investigated the causal relationship between carbon dioxide (CO₂) emissions, health spending and GDP growth for 51 countries (divided into three groups of countries: low-income countries; group of countries with lower and upper middle income; group of middle income countries) covering the annual period 1995-2013. Dynamic simultaneous-equations models and generalized method of moments (GMM) are used to investigate this relationship. The main results provide evidence of a causal relationship between the three variables. The empirical results show that there is a bidirectional causality between CO₂ emissions and GDP per capita, between health spending and economic growth for the three groups of estimates. The results also indicate that there is a unidirectional causality from CO₂ emissions to health spending, except low income group countries. We found that health plays an important role in GDP per capita; it limits its effect on a growing deterioration in the quality of the environment.