Study of Causal Relationship and Environmental Kuznets Curve Test in Iran

With regard to the effect of damaging emission on economic and the necessity of the economic growth, the problem is that, what is the relationship between environment damage and economic growth. The purpose of this paper is research in relation to dispersion of Carbon Dioxide, (metric tons per capita) and PM10 (microgram in cubic meter) with per capita income (with stable prices of 1997) -Thousand Rials in period of 1975-2007 and empirical test and the environmental Kuznets curve analysis in Iran. To reach the purposes, we applied Granger and Hsiao causality test and quadratic function estimation by Ordinary Least Square (OLS) method. Results show that the PM10 have a unidirectional causality with per capita income. The carbon dioxide and per capital income have feedback or bilateral causality. Also the environmental Kuznets curve for CO2 does not have inverse U form that is in the theoretical analysis. But for the case of PM10 it is right and its turning point is in 2173.9 thousand Rials.