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The Long-Run Decoupling of Emissions and Output: Evidence from the Largest Emitters

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Listed:
  • Gail Cohen
  • João Tovar Jalles
  • Mr. Prakash Loungani
  • Ricardo Marto

Abstract

For the world's 20 largest emitters, we use a simple trend/cycle decomposition to provide evidence of decoupling between greenhouse gas emissions and output in richer nations, particularly in European countries, but not yet in emerging markets. If consumption-based emissions—measures that account for countries' net emissions embodied in cross-border trade—are used, the evidence for decoupling in the richer economies gets weaker. Countries with underlying policy frameworks more supportive of renewable energy and climate change mitigation efforts tend to show greater decoupling between trend emissions and trend GDP, and for both production- and consumption-based emissions. The relationship between trend emissions and trend GDP has also become much weaker in the last two decades than in preceding decades.

Suggested Citation

  • Gail Cohen & João Tovar Jalles & Mr. Prakash Loungani & Ricardo Marto, 2018. "The Long-Run Decoupling of Emissions and Output: Evidence from the Largest Emitters," IMF Working Papers 2018/056, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2018/056
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    More about this item

    Keywords

    WP; trend elasticity; Emissions; Environmental Okun’s Law; Environmental Kuznets Curve; coefficient estimate; GHG emitter; elasticity estimate; consumption pattern; Greenhouse gas emissions; Emerging and frontier financial markets; Climate change; Environmental policy; Climate policy; Global;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • 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
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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