The impact of energy consumption and carbon gas emmissions on economic growth in new EU member and candidate countries

Especially in the recent years, the concept of energy and the related issues such as energy reserves, environmental protection, renewable energy systems and nuclear energy have become very significant. One of the most important reasons underlying this reality is the fact that energy has become a vital input in both the production process and the daily life itself which consequently affects economic growth. Moreover, the fact that the reserves of the abundant energy sources that have been used for centuries are accumulated in specific regions which establish a kind of monopoly and these reserves are expected to diminish in the future holds critical importance.Furthermore, the uses of these sources are also vital due to the fact that, (1) they are emitting high amounts of carbon dioxide which leads to environmental degradation; (2) because the reserves are limited and obtained by specific countries, most of the other countries are importers which create a burden on their Gross Domestic Product (GDP).For the reasons asserted above, the relationship between energy consumption, carbon dioxide emissions and economic growth has been a topic of interest among economists especially in the recent years. In order to determine the adequate policy applications, the studies have investigated the direction of causal relationship using a variety of models, variables and different samples.The aim of this study is to reexamine the nexus between energy consumption, economic growth and carbon dioxide emissions using Arellano-Bond?s system Generalized Method of Moments (GMM) model and Granger Causality. The sample of the study consists of the European Union (EU) member states of Central Eastern Europe (CEE) namely; Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovak Republic, Slovenia, Hungary, Bulgaria, Romania and the three candidate countries; Turkey, Macedonia FYR and Croatia for the data between the years 1997- 2008.