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Carbon dioxide emissions in the short run: The rate and sources of economic growth matter

Author

Listed:
  • Paul J. Burke
  • Md Shahiduzzaman
  • David I. Stern

Abstract

This paper investigates the short-run effects of economic growth on carbon dioxide emissions from the combustion of fossil fuels and the manufacture of cement for 189 countries over the period 1961–2010. Contrary to what has previously been reported, we conclude that there is no strong evidence that the emissions-income elasticity is larger during individual years of economic expansion as compared to recession. Significant evidence of asymmetry emerges when effects over longer periods are considered. We find that economic growth tends to increase emissions not only in the same year, but also in subsequent years. Delayed effects – especially noticeable in the road transport sector – mean that emissions tend to grow more quickly after booms and more slowly after recessions. Emissions are more sensitive to fluctuations in industrial value-added than agricultural value-added, with services being an intermediate case. On the expenditure side, growth in consumption and in investment have similar implications for national emissions. External shocks have a relatively large emissions impact, and the short-run emissions-income elasticity does not appear to decline as incomes increase. Economic growth and emissions have been more tightly linked in fossil-fuel rich countries.

Suggested Citation

  • Paul J. Burke & Md Shahiduzzaman & David I. Stern, 2015. "Carbon dioxide emissions in the short run: The rate and sources of economic growth matter," CAMA Working Papers 2015-12, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2015-12
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2015-04/12_2015_burke_shahiduzzaman_stern_0.pdf
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    References listed on IDEAS

    as
    1. Burke, Paul J., 2010. "Income, resources, and electricity mix," Energy Economics, Elsevier, vol. 32(3), pages 616-626, May.
    2. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    3. Bowen, Alex & Stern, Nicholas, 2010. "Environmental policy and the economic downturn," LSE Research Online Documents on Economics 37589, London School of Economics and Political Science, LSE Library.
    4. Burke Paul J., 2012. "Economic Growth and Political Survival," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-43, March.
    5. Zsuzsanna Csereklyei, M. d. Mar Rubio-Varas, and David I. Stern, 2016. "Energy and Economic Growth: The Stylized Facts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    6. Paul J. Burke, 2012. "Climbing the electricity ladder generates carbon Kuznets curve downturns," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 260-279, April.
    7. Doda, Baran, 2014. "Evidence on business cycles and CO2 emissions," LSE Research Online Documents on Economics 57009, London School of Economics and Political Science, LSE Library.
    8. Stern, David I. & Gerlagh, Reyer & Burke, Paul J., 2017. "Modeling the emissions–income relationship using long-run growth rates," Environment and Development Economics, Cambridge University Press, vol. 22(6), pages 699-724, December.
    9. Alex Bowen & Nicholas Stern, 2010. "Environmental policy and the economic downturn," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(2), pages 137-163, Summer.
    10. Burke, Paul J., 2013. "The national-level energy ladder and its carbon implications," Environment and Development Economics, Cambridge University Press, vol. 18(4), pages 484-503, August.
    11. Doda, Baran, 2014. "Evidence on business cycles and CO2 emissions," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 214-227.
    12. Baran Doda, 2013. "Emissions-GDP Relationship in Times of Growth and Decline," GRI Working Papers 116, Grantham Research Institute on Climate Change and the Environment.
    13. Alex Bowen & Nicholas Stern, 2010. "Environmental policy and the economic downturn," GRI Working Papers 16, Grantham Research Institute on Climate Change and the Environment.
    14. Dargay, Joyce & Hanly, Mark, 2007. "Volatility of car ownership, commuting mode and time in the UK," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 934-948, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic growth; emissions; pollution; business cycle; asymmetry; sector;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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