Evidence on business cycles and CO2 emissions

Doda, Baran (2014) Evidence on business cycles and CO2 emissions. Journal of Macroeconomics, 40. pp. 214-227. ISSN 0164-0704

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Abstract

CO2 emissions and GDP move together over the business cycle. Most climate change researchers would agree with this statement despite the absence of a study that formally analyzes the relationship between emissions and GDP at business cycle frequencies. The paper provides a rigorous empirical analysis of this relationship in a comprehensive cross-country panel by decomposing the emissions and GDP series into their growth and cyclical components using the HP filter. Focusing on the cyclical components, four robust facts emerge: (1) Emissions are procyclical. (2) Procyclicality of emissions is positively correlated with GDP per capita. (3) Emissions are cyclically more volatile than GDP. (4) Cyclical volatility of emissions is negatively correlated with GDP per capita. These facts are potentially important for the calibration of theoretical models used to evaluate climate change mitigation policies.

Item Type:	Article
Official URL:	http://www.journals.elsevier.com/journal-of-macroe...
Additional Information:	© 2014 Elsevier Inc.
Divisions:	Grantham Research Institute
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Costs; Distributional Effects; Employment Effects
Date Deposited:	11 Jun 2014 16:19
Last Modified:	07 Nov 2024 02:51
Funders:	Global Green Growth Institute, Grantham Foundation for the Protection of the Environment, Centre for Climate Change Economics and Policy
URI:	http://eprints.lse.ac.uk/id/eprint/57009

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