> Abstract
Nobody on the planet is going to be untouched by the impacts of climate change. This study aims to arrange the various
socioeconomic elasticities of environmental pollution in order of priority, depending on the length of time period, to establish the
most effective policy. We employed a simultaneous equations system to find out the various socioeconomic elasticities in the
long run and short run in Iran during 1974-2012. Based on the results, per capita CO2 emissions, GDP, energy consumption
show the strongest interactions (relationships and elasticities) in the equations system as a whole in the long run. Moreover, it is
the trade openness, labour force, financial development, and urbanization which show the most decisive effects in the short run.
So the effectiveness of the system variables depends on the time period. Trade openness, labour force, and financial development
play the most leading role in the short run, notwithstanding their limited role in the long run. However, energy consumption
elasticity of CO2 emissions and urbanization elasticity of energy consumption are among the largest elasticities both in short run
and long run. Therefore, energy consumption, economic growth and urbanization should be reduced and financial sector should
be grown to decrease the environmental pollution. Moreover, economic growth is an effective factor for the long run; and trade
openness and financial development are effective for the short run but urbanization and energy consumption are influential for
both the long run and short run policies.
Energy, Environment, and Economy Interactions in Iran with Cointegrated and ECM Simultaneous Model
