STOKING THE FIRES - CO2 EMISSIONS AND ECONOMIC-GROWTH

We examine the relationship between economic development and carbon di oxide emissions, a greenhouse gas central to global warming prediction s. Estimates derived from global panel data suggest a diminishing marg inal propensity to emit (MPE) carbon dioxide as GDP per capita rises. Despite this, global carbon dioxide emissions growth will continue at 1.8 percent per annum for the foreseeable future, a result that is not sensitive to average output growth. Instead, emissions growth continu es because output and population will grow most rapidly in lower-incom e nations with high MPEs. This latter feature emphasizes the distribut ional consequences of policies to reduce emissions.