Asymmetric Business Cycle Fluctuations and Emissions: Evidence From African Countries

This study examines the relationship between greenhouse gas emissions and the business cycle, which is important for environmental policy, given the potential conflict between environmental and economic growth objectives, especially in developing countries. Using a sample of 14 West and Central African countries, we implement a panel non‐linear autoregressive distributed lag (PNARDL) model on data from 1985 to 2020. The estimated coefficients indicate the existence of a long‐run asymmetric relationship between emissions and the business cycle. We also find unidirectional causality between periods of recession and CO2, asymmetric bidirectional causality between periods of expansion and CH4 and no Granger causality between business cycles and N2O. From a decision‐making perspective, this study suggests an incentive for virtuous behaviour of the population towards the environment, hybrid environmental policies such as green monetary policies and carbon taxes.