The Relationship between CO2, Emissions and Living Standards in China: A Time Series Approach

Abstract

As China has become the largest emitter of greenhouse gases, there are billions of tons of Carbon Dioxide (CO2) emitted every year. Due to the fact that pollution is a serious issue, China is confronted with substantial environmental challenge, as well as issues of living standards. It is important to study how CO2 emissions affect living standards, which is measured by GDP per capita. The ARIMA time series model is used to estimate this relationship, which is based on a time series dataset over 20 years (from 1993 to 2013). We expect a positive relationship between CO2 emissions and GDP per capita, and the results confirm that our hypothesis is accurate. More specifically, living standards in China are positively affected by total CO2 emissions and the living standards of the previous year.