New insights into decoupling economic growth, technological progress and carbon dioxide emissions: Evidence from 40 countries

• Published in: Technological forecasting & social change Vol. 174; p. 121250
• Main Authors: Leitão, João, Ferreira, Joaquim, Santibanez-González, Ernesto
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.01.2022; Elsevier Science Ltd
• Subjects: Carbon dioxide; Carbon dioxide emissions; Debt; Decoupling; Economic development; Economic growth; Economics; Environmental kuznets curve; Investment strategy; Investments; Macroeconomics; Material flows; Policy making; Raw materials; Regression models; Securities markets; Stock exchanges; Stock markets; Supply & demand; Technological progress; Debt; Carbon dioxide emissions; Material flows; Environmental kuznets curve; Stock markets; Technological progress
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2021.121250

•The macroeconomic fundamentals and material flows have non-linear effects on decoupling.•Economic growth is the main driver of CO2 emissions.•Stock markets and debt decrease CO2 emissions, in high-regimes of economic growth and debt.•Technology mitigates CO2 emissions in regimes of robust growth and low debt, in the European context. Overall, the literature strongly validates the Environmental Kuznets Curve hypothesis and the decoupling of the economy regarding energy intensity and raw materials. However, there is no assessment of whether such evidence derives from the non-linearities of macroeconomic fundamentals from considering a simultaneous supply-demand market perspective of material flows. Therefore, using a sample of 40 countries, we estimated a Panel Smooth Transition Regression model for the period between 1994 and 2016. The results showed that economic growth and material flows are the drivers of CO2 emissions. They also showed that stock markets and debt issuance reduce CO2 emissions in high regimes, and the preponderant technological progress in the European context, mainly on the demand side and in high-regimes of economic growth and low-debt regimes, contribute to reductions in CO2 emissions, even though positive in the low-regimes of economic growth. This study considered the efficiency levels and the evolution of macroeconomic fundamentals, providing new guidance for managers and policy-makers seeking to either innovate public policies and market positions or design sustainable asset investment strategies and portfolios.