The Unassuming Economist

From a paper by Enoch Quaye, Fred A. Yamoah, Pratyush K. Patro, and Adolf Acquaye:

“Research indicates that some countries have achieved decoupling between economic activity
and environmental damage, even considering consumption. We question whether emissions
reductions from decoupling sufficiently mitigate climate change to meet Sustainable
Development Goal 13: Climate Action. A novel approach is used to model latent information in
GDP growth rates to predict country-level sustainable carbon emission rates. We propose a
latent variable model for the growth rate of the CO2 emissions-to-GDP ratio to understand the
dynamics needed to achieve sustainable carbon thresholds for the Net Zero target. We document
that while the unconditional average GDP per capita growth trends upward, the belief in
its persistence is declining. The parameter linking consumption-based emissions with GDP per
capita growth is statistically significant. It indicates a downward trend and confirms that economies
can grow without a proportional increase in emissions as technology advances and people
alter their behaviour. The findings highlight the importance of policies and technological innovation
in decoupling economic growth from consumption emissions. Furthermore, the latent
variable (which is easy to learn) persists and barely changes during the estimation period 2010
to 2018. We observe a decline between 2015 and 2018, despite remaining high overall.”