Is Economic Volatility Detrimental to Global Sustainability?

Yongfu Huang

No 47.2010, Environmental Economy and Policy Research Working Papers from University of Cambridge, Department of Land Economics

Abstract: This paper examines the effects of economic volatility on global sustainability in a dynamic panel data model allowing for error cross section dependence. It finds that output volatility and financial market volatility exert strong negative impacts on sustainable development, with the impacts exacerbated in some subsamples such as higher energy intensity countries and lower trade share countries. The paper also identifies a financial development channel through which output volatility impedes global sustainability, highlighting the interaction between global financial markets and the wider economy as a key factor influencing the low carbon development path. The finding is significant for the conduct of macroeconomic and environmental policies in an integrated global green economy.

Keywords: Output Volatility; Financial Market Volatility; Global Sustainability; Genuine Savings; Cross Section Dependence (search for similar items in EconPapers)
JEL-codes: E32 O11 O16 (search for similar items in EconPapers)
Date: 2010, Revised 2010
New Economics Papers: this item is included in nep-ene, nep-env and nep-mac
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Journal Article: Is Economic Volatility Detrimental to Global Sustainability? (2012)
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