IMF Working Papers

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

Author/Editor:

Gail Cohen ; João Tovar Jalles ; Prakash Loungani ; Ricardo Marto

Publication Date:

March 13, 2018

Electronic Access:

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Summary:

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.

Series:

Working Paper No. 18/56

Subject:

Agriculture Climate policy Climatic changes Consumption Demand Developed countries Development Economic growth Economic indicators Economic recession Economic theory Economies Emerging markets Energy Energy policy Energy sector Environmental policy Exports Financial crises Fossil fuels Greenhouse gas emissions Gross domestic product Imports Industry International trade Market economies Nonlinear theories Oil Policy instruments Population Production Production growth Renewable resources Service exports Services Services industry Services sector Statistics Stocks Time series Trade partners Transition economies