DYNAMICS OF INFLUENCES BETWEEN CIRCULAR ECONOMY, INNOVATION AND SUSTAINABILITY IN THE EUROPEAN UNION USING THE VAR MODEL

This study examines the dynamic relationships between the circular economy, innovation and sustainability in the European Union over the period 2014-2023, using a VAR model to analyze the interactions between municipal waste recycling rates, resource productivity, circular material use rates, environmental tax revenues and R&D expenditure. The results of this study suggest complex relationships between the circular economy, innovation and sustainability in the European Union, highlighting that policies aimed at promoting recycling practices can positively contribute to increasing the use of circular materials. This study emphasizes the importance of integrating public policies in a coherent and complementary way so that circular economy, innovation and fiscal initiatives are effectively coordinated to contribute to a sustainable and equitable transition at European level. Proposed recommendations include the development of innovation strategies that explicitly focus on increasing resource productivity, improving recycling infrastructure and harmonizing the fiscal framework between Member States to support the use of circular materials.