Changes in CO2 emissions over business cycle recessions and expansions in the United States: A decomposition analysis

• This paper examines the changes in CO2 emissions over business cycle phases.
• It used yearly data back to 1949 and monthly data from 1973 for the US.
• Emissions and emissions intensity reduce much faster in contractions.
• Emissions per capita continued to decline in the post-GFC expansion.
• GFC may have had an ongoing impact on the path of per capita emissions.

This paper examines the asymmetry of changes in CO2 emissions over business cycle recessions and expansions using yearly data from 1949 and monthly data from 1973 for the United States (US). In addition, decomposition analysis is applied to investigate the relative roles of various proximate contributing factors to observed changes in total and per capita CO2 emissions and emissions intensity, over business cycle phases. The results suggest, inter alia, that aggregate emissions and emissions intensity reduce much faster in contractions than they increase in expansions. In addition, unlike the three previous expansions, in the most recent post-GFC US expansion, emissions per capita have continued to decline, and at a rate very similar to the rate of reduction in preceding contractions. This suggests the real possibility that the most recent contraction may have had an ongoing impact on the path of per capita emissions well beyond the immediate impact experienced during the contraction itself.