The intertemporal substitution effect of energy consumption under climate policy changes

Yingying Xu, Bolun Fan, Zhixin Liu, Yueqiang Zhao and Adelina Dumitrescu Peculea

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 3, 2164866

Abstract: Based on the intertemporal substitution effect, the high inflation expectations can stimulate agents to consume now rather than in the future. However, under the background of global climate policy changes, how inflation expectations affect energy consumption? Using the bootstrap Granger full-sample causality test and sub-sample rolling window tests, this study examines the intertemporal substitution effect of energy consumption in the U.S. The results based on the full-sample data indicate no causality between inflation expectations and energy consumption, which suggests that the intertemporal substitution effect of energy consumption does not exist. Nevertheless, the rolling window method which estimates a time-varying causality identifies a short-lived positive effects of inflation expectations on energy consumption in a distinct sub-period before the global Paris agreement, but disappears since then. Therefore, the intertemporal substitution effect regarding energy consumption does not exist under the background of pressing carbon targets. The effects of energy consumption on inflation expectations can be positive or negative, which tells a cautionary tale about climate policies aiming at engineering lower carbon emissions.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2023.2164866 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:36:y:2023:i:3:p:2164866

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2023.2164866

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().