Scandinavian Working Papers in Economics
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Department of Economics, School of Business, Economics and Law, University of Gothenburg Working Papers in Economics

No 29:
The Effects of Economic and Political Freedom on CO2 Emissions

Fredrik Carlsson () and Susanna Lundström

Abstract: In this paper we investigate the effects of political and economic freedom on CO2 emissions. As far as we know this is the first cross-country study of the relationship between economic freedom and environmental quality. Economic freedom is measured in several ways. We find that increased price stability and legal structure decrease emissions in countries with a small industry share of GDP, but increases emissions in countries with a large industry share of GDP. The decreasing effect from increased use of market is significant but non-robust, and increased freedom to trade does not have any significant effect. The effect of political freedom on CO2 emissions is insignificant, most probably since CO2 emissions is a global environmental problem and hence subject to free-riding by the individual countries.

Keywords: Carbon Dioxide; Economic Freedom; Institutions; Political Freedom; (follow links to similar papers)

JEL-Codes: O10; O40; (follow links to similar papers)

16 pages, September 27, 2000, Revised February 21, 2003

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