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Asymmetric response of carbon emissions to recessions and expansions and oil market shocks

Author

Listed:
  • Xueting Jiang
  • David I. Stern

Abstract

The 2020 COVID-19 driven recession saw a sharp drop in carbon dioxide emissions as transportation and some other energy uses were curtailed. This was an unusual recession as it was driven by a pandemic. Previous research shows that when GDP declines carbon emissions fall faster relative to GDP than they rise in economic booms. Using monthly US data, we examine each individual recession in the US since 1973 finding that there is an asymmetric response in the 1973-5, 1980, 1990, and 2020 recessions but not in the 1981-2, 2001, or 2008-9 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.

Suggested Citation

  • Xueting Jiang & David I. Stern, 2021. "Asymmetric response of carbon emissions to recessions and expansions and oil market shocks," CAMA Working Papers 2021-92, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2021-92
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2021-10/92_2021_jiang_stern_0.pdf
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Video of My Presentation on Asymmetric Carbon Emissions
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2022-03-28 04:47:00

    More about this item

    Keywords

    COVID-19; climate change; business cycle;
    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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