Emissions and Growth: Trends and Cycles in a Globalized World

By Gail Cohen, João Tovar Jalles, Prakash Loungani, Ricardo Marto

August 30, 2017

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Gail Cohen, João Tovar Jalles, Prakash Loungani, and Ricardo Marto. Emissions and Growth: Trends and Cycles in a Globalized World, (USA: International Monetary Fund, 2017) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Recent discussions of the extent of decoupling between greenhouse gas (GHG) emissions and real gross domestic product (GDP) provide mixed evidence and have generated much debate. We show that to get a clear picture of decoupling it is important to distinguish cycles from trends: there is an Environmental Okun's Law (a cyclical relationship between emissions and real GDP) that often obscures the trend relationship between emissions and real GDP. We show that, once the cyclical relationship is accounted for, the trends show evidence of decoupling in richer nations—particularly in European countries, but not yet in emerging markets. The picture changes somewhat, however, if we take into consideration the effects of international trade, that is, if we distinguish between production-based and consumption-based emissions. Once we add in their net emission transfers, the evidence for decoupling among the richer countries gets weaker. The good news is that countries with underlying policy frameworks more supportive of renewable energy and supportive of climate change tend to have greater decoupling between trend emissions and trend GDP, and for both production- and consumption-based emissions.

Subject: Business cycles, Economic growth, Environment, Exports, Greenhouse gas emissions, Imports, Income, International trade, National accounts

Keywords: Africa, Business cycle, Business cycles, East Asia, Eastern Europe, Emissions, Emissions-output elasticity, Environmental Kuznets Curve, Environmental Okun’s Law, Exports, Global, Greenhouse gas emissions, Imports, Income, Kuznets coefficient, Kuznets elasticity, Okun coefficient, Okun elasticity, Real GDP, Time series, WP

Publication Details

Pages:

58
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/191
Stock No:

WPIEA2017191
ISBN:

9781484316702
ISSN:

1018-5941

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