A Post-Keynesian analysis of carbon emission shocks and economic development: case studies of China, Japan and Australia

Chaiechi, Taha (2011) A Post-Keynesian analysis of carbon emission shocks and economic development: case studies of China, Japan and Australia. In: Proceedings of the SIBR-Thammasat 2011 Conference on Interdiscipinary Business and Economics Research, pp. 1-35. From: SIBR-Thammasat 2011 Conference on Interdiscipinary Business and Economics Research, 16-18 June 2011, Bangkok, Thailand.

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Abstract

This paper attempts to analyze the dynamic effect of carbon dioxide emission on key macroeconomic variables of Australia, China and Japan for the period of 1980 to 2008. A Kaleckian-Post-Keynesian multi-sectoral open economy model, which is augmented by a demand driven labour market, a reserve army effect in the Marxian sense and technological change is being utilized and econometric long run relationship between variables are investigated.

The paper mainly focuses on the link between carbon emission and sources of economic development such as investment, saving, income distribution and labor market fluctuations. By employing the Structural vector autoregressive (SVAR) approach, the paper investigates that if there is a cointegrating relationship between the variables in selected countries by imposing short and long-run restriction on SVAR model. The short run restrictions impose contemporaneous feedback effects among the real sector variables and CO2 following the methodology described in Bernanke (1986), Blanchard and Watson (1986), and Sims (1986), and the long run restrictions in SVAR approach is an alternative to cointegration for capturing long-run equilibrium relationships.

In this study we assume that economy faces exogenous, random positive and/or negative shocks to CO₂ emission levels, which can have substantial impact on key macroeconomic indicators, then the main intention is to examine whether key macroeconomic indicators differ significantly in their responses to shocks (unexpected variation) of carbon dioxide emission in the medium term to long run.

Item ID: 23132
Item Type: Conference Item (Non-Refereed Research Paper)
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Conference theme: advancing knowledge from interdisciplinary perspectives: past experience and future agenda

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Date Deposited: 12 Sep 2012 04:37
FoR Codes: 14 ECONOMICS > 1401 Economic Theory > 140102 Macroeconomic Theory @ 50%
14 ECONOMICS > 1403 Econometrics > 140305 Time-Series Analysis @ 50%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9101 Macroeconomics > 910103 Economic Growth @ 60%
91 ECONOMIC FRAMEWORK > 9199 Other Economic Framework > 919901 Carbon and Emissions Trading @ 40%
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