From shadow economy to lower carbon intensity: theory and evidence

The purpose of the research paper is to investigate the chain link 'pollution-shadow economy' in the context of the analytical estimation of the impact of individual factors and the level of carbon intensity of gross domestic product (GDP). The article determines the impact of individual factors with transfer to the system of chain interconnections based on regression analysis. On the basis of successive mathematical iterations consisting in confirmation of stationarity (Dickey-Fuller test) and cointegration of data series (Johansen test), the cointegration equations of the dependence of GDP carbon intensity on the level of economy shadowing, the amount of tax payments, the rate of unemployment and the amount of public expenditures on environmental protection have been constructed. It is scientifically based that in all the European countries without exception, taxes and public investments have the greatest impact on the carbon intensity of the GDP of the economy.