What is the relationship between environmental quality, economic growth and free trade?

Aïcha El Alaoui
586 151

Abstract


This paper tries to examine the links between free trade, growth, and environmental quality in Morocco, Algeria, Tunisia, and Egypt, denoted MATE. During the last years, many agreements are concluded especially with developed countries. These agreements can improve economic growth, which is necessary in response especially to the increasing demand of their populations, and to the improvement of the life’s quality of their citizens. But, it can also decrease the environmental quality because there is a causal relationship between these variables. For that, quadratic and cubic functions for each country over the period 1970-2010 are tested to measure this relationship, and to determinate the possibilities of the existence of an inverted U-shaped or inverted N-shaped functions, and, then, a vector auto regression (VAR) or a vector error correction model (VECM) are used to analyze the long-run and short-run relationships between those variables. To complete analysis, it is often useful to know the response of independent variable and it adopts a variance decomposition to explain the magnitude of the forecast error variance determined by the stocks to each of the causal variables over time.

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References


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