Investigation of the Sensitivity of EU Countries to Temperature Anomalies in Terms of Economic and Technological Indicators

Abstract

In this study, the interrelationships between global climate change and EU countries’ GDP, investments, R&D expenditures, innovations, and labor productivity indicators are discussed. Global temperature anomalies are adopted as an indicator of climate change and the relationsgip estimated with the panel vector autoregreesion (PVAR) approach for the period from 1996 to 2018. Results suggest that an increase in atmospheric temperature has negative efect on economic growth, investment, and labor productivity. However, an increase in atmospheric tempetrature increases patent applications by 0.4% in the long run. Moreover, while economic growth and investments trigger temperature anomalies, labor productivity has a negative efect on atmospheric temperature. The long-run coefcient estimation results are confrmed by analysis, and the existence of strong dynamic relationships between the variables is determined. Impulse–response graphs difer from these results and emphasize that the efects caused by shocks should be considered temperature anomalies and EU’s technological and economic developments.