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Citation link: https://doi.org/10.26092/elib/207
00107732-1.pdf
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The response of CO2 emissions to the business cycle: New evidence for the U.S.


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Authors: Klarl, Torben  
Publisher: Institute for Economic Research and Policy (IERP) 
Abstract: 
This paper investigates the response of CO2 emissions to the business cycle for the U.S. on a monthly basis between 1973-2015. Using a rolling-regression approach, we find that the emissions elasticity with respect to GDP is not constant over time, irrespective which filtering method, such as the Hodrick-Prescott, the Baxter-King, the Christiano-Fitzgerald or the Butterworth filter has been employed. In order to check whether or not emissions react differently during normal and recession times, next, we employ a Markov-switching approach. We find, first, that emissions are significantly more elastic during recessions, than in normal times. Second, depending on the filtering method, we also obtain parameter estimates of the emissions elasticity above one in recession times and below one in normal times. Thus, environmental policy instruments not turning out to be sub-optimal should account for this asymmetric response of emissions due to changes in GDP.
Keywords: Business cycle; CO2 emissions; Rolling-regression; Markov-switching
Issue Date: 2019
Journal/Edited collection: Bremen Papers on Economics & Innovation 
Pages: 25
Type: Artikel/Aufsatz
ISSN: 2629-3994
Secondary publication: no
DOI: 10.26092/elib/207
URN: urn:nbn:de:gbv:46-00107732-10
Institution: Universität Bremen 
Faculty: Fachbereich 07: Wirtschaftswissenschaft (FB 07) 
Institute: IERP - Institute for Economic Research and Policy 
Appears in Collections:Forschungsdokumente

  

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