A panel data study of causality links between CO₂ concentration and temperature

Abstract While the role of rising CO 2 concentration in increasing the temperature is well known, the opposite causality link, from temperature to CO 2 concentration, received far less scrutiny. In this paper, we address the relation between the two variables using the Dumitrescu–Hurlin panel causality test for a panel of individual areas of the planet. We also run individual areas-level Granger causality tests to determine the geographical distribution of the local causal links between the CO 2 concentration and temperature. We find evidence of both causality directions at the global level, suggesting potential feedback between CO 2 concentration and temperature. We also find that the global phenomenon results from a very fragmented geographical distribution of mostly unidirectional causality links at the local level. Considering the two results jointly, this work potentially provides insights into the connection between average trends of human-induced global warming and particular local conditions experiencing extreme meteorological conditions.