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Evidence on business cycles and CO2 emissions

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  • Doda, Baran

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.

Suggested Citation

  • Doda, Baran, 2014. "Evidence on business cycles and CO2 emissions," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 214-227.
    • Handle: RePEc:eee:jmacro:v:40:y:2014:i:c:p:214-227
    DOI: 10.1016/j.jmacro.2014.01.003
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    More about this item

    Keywords

    Business cycle fluctuations; Climate change; CO2 emissions;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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