Decoupling of Emissions and GDP: Evidence from Aggregate and Provincial Chinese Data

27 Pages Posted: 22 May 2018

See all articles by Gail Cohen

Gail Cohen

The National Academies - National Academy of Sciences (NAS)

João Tovar Jalles

International Monetary Fund (IMF); Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Prakash Loungani

International Monetary Fund (IMF)

Ricardo Marto

International Monetary Fund (IMF)

Gewei Wang

University of Nottingham

Date Written: April 2018

Abstract

We provide a comprehensive analysis of the relationship between greenhouse gas (GHG) emissions and GDP in China using both aggregate and provincial data. The Kuznets elasticity is about 0.6 for China, higher than that in advanced countries but below that of major emerging markets. The elasticity is somewhat lower for consumption-based emissions than for production-based emissions, providing mild evidence consistent with the 'pollution haven' hypothesis. The Kuznets elasticity is much lower for the last three decades than for the three previous decades, suggesting a longer-term trend toward decoupling as China has become richer. Further evidence of this comes from provincial data: richer provinces tend to have smaller Kuznets elasticities than poorer ones. In addition to the trend relationship, we find that the Environmental Okun's Law holds in China.

Keywords: Greenhouse gas emissions, Gross domestic product, China, Emissions, Environmental Okun's Law, Kuznets Curve, China, Provinces

JEL Classification: E32, O44

Suggested Citation

Cohen, Gail and Jalles, João Tovar and Loungani, Prakash and Marto, Ricardo and Wang, Gewei, Decoupling of Emissions and GDP: Evidence from Aggregate and Provincial Chinese Data (April 2018). IMF Working Paper No. 18/85. Available at SSRN: https://ssrn.com/abstract=3182511

Gail Cohen (Contact Author)

The National Academies - National Academy of Sciences (NAS) ( email )

500 Fifth Street, NW
Washington, DC 20001
United States

João Tovar Jalles

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

Prakash Loungani

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7043 (Phone)
202-623-4740 (Fax)

Ricardo Marto

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Gewei Wang

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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