Evidence on Clean Energy Consumption and Business Cycle: A Global Perspective

Abstract

This paper aims to investigate the heterogeneous patterns of clean energy consumption at business cycle frequencies. Specifically, this paper provides a rigorous empirical analysis of this relationship in a comprehensive cross-country panel by decomposing the emissions and GDP series into their growth and cyclical components using the HP filter. Focusing on the cyclical components, robust stylized facts we conclude as follows: (1) Clean energy consumption is procyclical in advanced economies and developing economies, but acyclical in the OPEC; (2) Clean energy consumption is cyclically more volatile than GDP in a typical country; (3) The correlation between cyclicality of clean energy consumption and GDP per capita is more intricate in different country groups; (4) Clean energy consumption is positively correlated with the oil price in advanced economies and developing economies, and negatively correlated in OPEC. These stylized facts are potentially important for establishing theoretical models to analyze the consequences and impacts of clean energy consumption.