Business cycle fluctuations and emissions: evidence from South Asia
CO2 emissions and GDP fluctuations are believed to be strongly related. However, empirical evidence from different parts of the world other than United States, is quite scarce. Moreover, the existing studies focused on CO2 and ignored other important emissions, like methane (CH4), nitric oxide (NO), and Greenhouse Gases (GHGs). For South Asian countries, this study documents the stylized facts between key emissions and GDP also including the relationship with its major components. It is found that CO2 emissions are procyclical and highly volatile, but the behaviour of other emissions changes from country to country. CH4, NO and GHGs are procyclical in India but not in Bangladesh. In Pakistan, there is positive correlation between cyclical components of GHGs and output from services and agriculture sector. Furthermore, using Structural Vector Autocorrelation, it is estimated that response of the emissions to technological shock is also different for different countries. In India and Bangladesh, improving technology will result in decreasing while in Pakistan and Sri Lanka, it will result in increasing the CO2 emissions permanently. However, the impact of technology shock on GHGs emissions in the latter two countries will be temporary. These outcomes indicate that each country should formulate effective environmental policies keeping in view its own economic realities.
Sarwar, M. N., Ali, S., & Hussain, H. (2021). Business cycle fluctuations and emissions: evidence from South Asia. Retrieved from https://ir.iba.edu.pk/student-publications/21
Sarwar, M. N., Ali, S., & Hussain, H. (2021). Business cycle fluctuations and emissions: Evidence from South Asia. Journal of Cleaner Production, 298, 126774.