This paper examines causal relationships between environment, GDP and trade for Iran using annual data over the period 1970-201, applying the techniques of the long–run Granger non–causality test proposed by Toda and Yamamoto (1995). The results suggest that there is a long-run relationship between these variables. CO2 emissions have a positive long-run relationship with per capita income, indicating economic growth tends to worsen environmental quality. In addition, CO2 emissions have a positive long-run relationship with openness, supporting for the so-called race-to-the bottom hypothesis for developing countries. The Granger Causality test indicates strong unidirectional effects from GDP to CO2 emissions.
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