The Causality Analysis of Climate Change and Economics

Nowadays some countries suffer from the climate change whereas the leaders in the greenhouse gasses (GHG) production refuse to institute stricter policies mitigating the effect of emissions on the environment. The aim of the study is to determine factors affecting changes in the average air temperature for the chosen countries and to study the causality between economic processes and the global warming. Clustering is used in order to determine the country groups and to choose some of them for more detailed analysis further. Methods for working with panel datasets and time series are used to evaluate the impact of economic variables on average temperature and to study causal inference between the features. The focus of the thesis is the factors affecting the climate change. The economic variables reflecting the level of production and wealth for the countries are the object of the study. The main objectives of the study are: 1) to cluster countries according to their contribution to the climate change in terms of the production scale or carbon dioxide emissions; 2) to identify factors influencing the global warming; 3) to study the interrelationship between the production and the changes in the average air temperature; 4) to conclude on the possible effects of the current climate change policies on the environment and the economics. The study is aimed to fill in the gap in the detailed analysis of the causal inference between climate change and economics for a range of countries including Russia. The practical importance lies in the determination of factors influencing global warming. The results may be employed by policymakers to design a policy to tackle the climate change.