Trade Openness - CO.sub.2 Emissions Nexus: a Wavelet Evidence from EU

The paper explores the interaction between trade openness and CO.sub.2 emissions in the European Union (EU) by using the wavelet tool. The sample covers the period 1960-2014, capturing both pre- and post-integration EU periods. The main findings show that the CO.sub.2 emissions drive the trade in the short and long terms but only under a strong impact of economic shocks, energy use and economic growth. A translation effect towards non-pollutant capacities supporting the exports is registered in the long term, at business cycle, highlighting a new effect, namely 'inverted pollution haven effect'. Otherwise, the imports run the CO.sub.2 emissions in the medium term as 'scale effect' but during external crisis only, rising the role of income volatility in parallel with its related level.