Asymmetric response of carbon emissions to recessions and expansions is explained by negative oil market shocks

Crawford School of Public Policy
Photo by Max Pixel

Event details

ACDE Seminar

Date & time

Tuesday 21 September 2021


Online via Zoom


David Stern, Australian National University

The 2020 COVID-19 driven recession saw a sharp drop in carbon dioxide emissions as transportation and some other energy uses were curtailed. This was an unusual recession – past recessions were driven primarily by changes in investment and central bank policies or oil price shocks, while this one was driven by a pandemic. Previous research showed that when GDP declines carbon emissions fall faster relative to GDP than they rise in economic booms. Using monthly US data, we examine each individual recession in the US since 1973 finding that there is an asymmetric response in the 1973–75, 1980, 1990, and 2020 recessions but not in the 1981–82, 2001, or 2007–09 recessions. The former four recessions are associated with negative oil market shocks. In the first three there was a supply shock and in 2020 a demand shock.

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