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Evidence on business cycles and CO2 emissions

  • Doda, Baran
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    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S016407041400007X
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    Article provided by Elsevier in its journal Journal of Macroeconomics.

    Volume (Year): 40 (2014)
    Issue (Month): C ()
    Pages: 214-227

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    Handle: RePEc:eee:jmacro:v:40:y:2014:i:c:p:214-227
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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