Evidence on business cycles and CO2 emissions

Baran Doda

Journal of Macroeconomics, 2014, vol. 40, issue C, 214-227

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.

Keywords: Business cycle fluctuations; Climate change; CO2 emissions (search for similar items in EconPapers)
JEL-codes: E32 O57 Q43 Q54 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (81)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:40:y:2014:i:c:p:214-227

DOI: 10.1016/j.jmacro.2014.01.003

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