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Asymmetric business cycle changes in US carbon emissions and oil market shocks

Author

Listed:
  • Xueting Jiang

    (Australian National University)

  • David I. Stern

    (Australian National University)

Abstract

Previous research shows that, in the USA, the elasticity of carbon emissions with respect to GDP is greater when GDP declines than when GDP increases. Using monthly US data, we examine each individual recession since 1973. We find asymmetric changes in carbon emissions in the 1973–1975, 1980, 1990–1991, and 2020 recessions but not in the 1981–1982, 2001, or 2008–2009 recessions. The former four recessions are associated with negative oil market shocks. In the first three, there was a supply shock and in 2020, a demand shock. Changes in oil consumption that are not explained by changes in GDP explain these asymmetries. Furthermore, the asymmetries are due to emissions in the transport and industrial sectors, which are the main consumers of oil. We conclude that emissions behaved similarly in 2020 to the way they did in recessions associated with oil supply shocks, but, actually, this pattern is not inherent to the business cycle itself.

Suggested Citation

  • Xueting Jiang & David I. Stern, 2023. "Asymmetric business cycle changes in US carbon emissions and oil market shocks," Climatic Change, Springer, vol. 176(11), pages 1-24, November.
    • Handle: RePEc:spr:climat:v:176:y:2023:i:11:d:10.1007_s10584-023-03620-2
    DOI: 10.1007/s10584-023-03620-2
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    More about this item

    Keywords

    COVID-19; Climate change; Economic growth; Recessions;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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