Green preferences

Francesco Busato (), Bruno Chiarini, Gianluigi Cisco () and Maria Ferrara
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Francesco Busato: University of Naples Parthenope
Gianluigi Cisco: University of Naples “Parthenope”

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 4, No 11, 3253 pages

Abstract: Abstract This paper studies how interaction between economic decision-making and environmental awareness affects US business cycle and GHG emissions in a two-sector DSGE model. We emphasize the mechanisms that relate carbon emissions dynamics, consumer behavior, and environmental awareness in a framework incorporating two classes of goods (i.e., “clean” and “dirty”). This paper offers three main results. First, green consumption preferences play a key role in emissions reduction when they internalize emissions concentrations. Second, a green preference shock is the second source of fluctuation in many sectoral variables and stabilizes the business cycle. Third, a pollutant supply shock leads to sustainable consumption procyclicality documented in US data, only if households are environmentally aware.

Keywords: Carbon emissions; Environmental awareness; DSGE model; General equilibrium; Global warming; Green consumer behavior (search for similar items in EconPapers)
JEL-codes: E32 Q51 Q54 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02179-9

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