51. CO2 response to business cycles: New evidence of the largest CO2-Emitting countries in Asia and the Middle East.
- Author
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Azami, Somayeh and Angazbani, Fatemeh
- Subjects
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BUSINESS cycles , *AUTOREGRESSIVE models , *RECESSIONS , *ENVIRONMENTAL policy , *COUNTRIES , *ELASTICITY - Abstract
This paper examines CO 2 response to business cycles of six large CO 2 - emitting countries in Asia and the Middle East, namely China, India, Japan, Iran, Saudi Arabia, and South Korea by using a Markov-switching autoregressive models. Emissions are cyclically more volatile than GDP in a typical country, except for Iran. It is observed that emissions are procyclical in all studied countries except for India, but the elasticity of the emission with respect to GDP significantly depends on regimes. In Japan and South Korea, elasticity of CO 2 emissions with respect to GDP during expansions is significantly larger than during recessions. In Iran and Saudi Arabia, elasticity of CO 2 emissions with respect to GDP is significantly smaller than 1, but the CO 2 emissions response to GDP during recessions is significantly larger than during expansions. In China, elasticity of CO 2 emissions to GDP is significantly larger than 1 during recessions and normal and CO 2 emissions response to GDP during recessions is significantly larger than during expansions. These results have implications for environmental policy makers; the optimal response of pollution-abatement costs in Japan and South Korea should be high (low) during expansions (recessions) and in China, Iran and Saudi Arabia should be low (high) during expansions (recessions) after releasing a positive productivity shock. [ABSTRACT FROM AUTHOR]
- Published
- 2020
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