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Testing for Causality between Climate Policies and Carbon Emissions Reduction

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  • Candelon, Bertrand

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Hasse, Jean-Baptiste

    (Aix-Marseille University)

Abstract

In this paper, we evaluate the causal effects of climate policies on carbon emissions reductions. Using Sweden as a case study, we compare the effects of the domestic carbon tax and the Kyoto Protocol over the period 1965–2018. A simulation exercise shows that the test for causality in the frequency domain offers policy-makers a useful tool for evaluating the effect of public policies. The empirical results indicate a significant causal effect of the carbon tax policy on carbon intensity dynamics in the long run.

Suggested Citation

  • Candelon, Bertrand & Hasse, Jean-Baptiste, 2022. "Testing for Causality between Climate Policies and Carbon Emissions Reduction," LIDAM Discussion Papers LFIN 2022005, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlf:2022005
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    More about this item

    Keywords

    Granger causality ; Spectral analysis ; Climate policy ; Carbon tax;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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