The effect of climate change on economic growth in European countries: an empirical evidence from Panel ARDL approach

This paper examined the impact of climate change on economic growth using panel data from 20 European countries during the period 1990–2020 and the estimation techniques of cointegration and the ARDL model. The empirical results reveal that precipitation; labour force and CO₂ emissions have a positive effect on long-term economic growth in sample countries. However, temperature, foreign direct investment, and urbanization have a negative effect on growth over the same period. Therefore, our study highlights the complex links between climate, demographic, and economic developments in European countries over the past three decades. Urbanizations, as a driver of urban development, and FDI, indicators of economic attractiveness, influence not only economic dynamics but also environmental impacts, exacerbating the challenges of CO₂ emissions and climate change.