The relationship between CO(2) emissions, economic growth, available energy, and employment in SEE countries

As a result of a greater worldwide aspiration for wealth and economic progress, increased use of natural resources for diverse industries resulted in increased pollution emissions, mainly carbon dioxide. Energy security, economic stability, job security, biodiversity loss, climate change, and global warming all require reconciliation and resolution now, more than ever before. This paper explores the causal relationship between CO(2) emissions, economic growth, available energy, and employment for a panel of eight South-Eastern European countries from 1995 to 2019. We investigate the relationship using panel unit root tests, panel cointegration methods, and panel causality tests. The results show a short-run bidirectional panel causality between CO(2) emissions and employment and between available energy and employment. The results further indicate a unidirectional causality from available energy and employment to GDP. The long-run causal relationship results show that the estimated coefficients of the lagged ECT in the CO(2) emissions, GDP, and employment equations are statistically significant, implying that these variables could play a significant role in the system’s adjustment process as it departs from long-run equilibrium. We also conducted a variance decomposition analysis, which allowed us to compare the extent of the individual factors’ contributions to each other over the next 5 years.