The Unassuming Economist

From a paper by Dániel Szilágyi and Tímea Kocsis:

“The paper examines the relationship between economic growth and greenhouse gas (GHG) emissions in Hungary from 1995 to 2022 using the Tapio decoupling model and the Mann-Kendall trend test. The Tapio decoupling elasticity coefficient (DI) was used to assess the relation between economic activity and environmental impact. The Mann-Kendall trend test was used to detect monotonic trends in Gross Value Added (GVA) and emissions, revealing their statistical significance and direction of change. The results revealed varying decoupling trends across various sectors. Strong decoupling occurred in sectors like B, C, D, and E, where emissions decreased alongside economic growth, reflecting technological advancements and structural shifts. Weak decoupling was observed in sectors such as A, F, G, and Q, where emissions grew more slowly than GVA, indicating progress but falling short of full decoupling. Conversely, sector T exhibited expansive negative decoupling, revealing unsustainable growth. At the national level, data from recent years have shown a trend toward absolute decoupling, in which GVA grew as emissions stabilized or declined. The Mann-Kendall test confirmed consistent economic growth across all sectors but diverse emission trends. Sectors like B and E achieved significant reductions in emissions, while others, including A and T, recorded increases. Some sectors, like I and M, displayed no clear trends, influenced by external or sector-specific factors.”

From a paper by J. Mikael Malmaeus, Linn Andreou Brolin, Pernilla Hagbert, Åsa Nyblom, Mirjam Särnbratt, Johan Rootzén:

“Current strategies to reduce the climate impact of production and consumption are insufficient to meet the pressing targets of the Paris Agreement. To expand visions of the possible ‘solution space’ in climate transitions, we explore a framework based on two dichotomies centred around the role of labour and the composition of economic output. From these dichotomies we sketch out four pathways for a future low-carbon society: Green growth, Care economy, Degrowth and Green accelerationism. Using a stylized representation of the Swedish economy as a case, we explore possible changes in the economic structure following the different pathways with respect to labour inputs, production volumes, GHG emissions and resource use in different sectors. The pathways suggest different strategies and overarching logics for decarbonisation. The results indicate that the technological emphasis in prevalent green growth strategies is not sufficient to stay within a carbon budget in line with the Paris agreement. Depending on the pathway taken, the upholding of social welfare, reassessing the role of labour and shifting production and consumption patterns become key challenges. Overall, key insights indicate that swift, radical transformation can advance climate goal attainment but also demands major societal reorganisation. The results also illustrate how the different transformation pathways entail distinct trade-offs, each associated with its own set of advantages and challenges.”

From a paper by Princewill Okwoche, Abdiaziz Abdikadir Ahmed, and Emmanuel Aondongusha Asu:

“East Africa has recorded strong economic growth over the past three decades alongside a steady rise in carbon emissions, raising concerns about whether the region can sustain growth without worsening environmental pressures. This study incorporates key macroeconomic drivers of carbon emissions using panel data for 9 countries from 1990 to 2023, aiming to differentiate between capital-driven and trade-driven globalization. Additionally, the output-emissions nexus is re-examined. Empirical analysis employs the panel fully modified ordinary least squares with robustness checks for heterogeneity and cross-section independence, using panel quantile regression and fixed effects with Driscoll and Kraay standard errors. The results show, first, strong support for the pollution haven hypothesis, as FDI consistently raises emissions across specifications. Second, the environmental effect of trade is mixed and conditional. Trade appears pollutions-increasing in simple nonlinear models (without controls) but becomes insignificant once controls are imposed. An emissions-reducing effect emerges in specifications modeling income nonlinearity and at higher emissions quantiles. Third, the income-emissions nexus follows a monotonic cubic form with a single inflection point, where emissions rise with income at an increasing rate initially, before beginning to decelerate at higher income levels. Finally, urbanization, financial development, and especially energy intensity are robust positive drivers of emissions. The results emphasize the need for stronger environmental governance around FDI, cleaner trade integration, and reforms that reduce energy intensity and guide urban and financial development toward a low-carbon path. We discuss other policy recommendations based on the findings.”

From a paper by Yannan Zhou, Ying Lu, Yu Yang, Yan Cheng, Ze He, Yuxin Wang, and Yuli Shan:

“In an increasingly globalized world, energy security is no longer solely determined by direct energy imports but also by complex, cross-border flows of embodied energy embedded within traded goods and services. This study investigates how these embodied energy transfers reshape national energy dependencies and risk exposures within global production networks. Using a multi-regional input-output (MRIO) model based on GTAP 11 and IEA data, this study develops indicators of embodied energy import dependency and diversification, and introduces an innovative energy-risk mask method to identify the spatial sourcing tiers of energy risks embedded in international trade. Our findings show that while global embodied energy dependency has declined slightly since 2000, highly globalized economies such as Singapore and Luxembourg remain extremely reliant on external energy inputs. In addition, countries including Norway and China exhibit structurally concentrated embodied energy import sources, increasing their exposure to potential supply chain disruptions. Moreover, over 50% of global medium- and high-risk embodied energy is transmitted through long-distance trade, with large emerging economies like China and India heavily reliant on energy embedded in imports from geopolitically unstable regions. These risks are often obscured by conventional energy security metrics, which fail to capture the hidden dependencies of complex global supply chains. This study calls for the integration of embodied energy flow considerations into national energy strategies, emphasizing the need for diversified sourcing, upstream risk monitoring, and trade-energy policy coordination to enhance resilience in a geopolitically interconnected world.”

From a paper by Thomas Bourany , and Jordan Rosenthal-Kay:

“To combat global warming, climate policies like carbon taxes, renewable subsidies, and carbon tariffs must be implemented to phase out fossil fuel consumption and lower emissions. Who are the winners and losers of such policies? Through a simple Integrated Assessment Model with heterogeneous countries and international trade in goods and energy, we study both the costs of implementing these policies unilaterally, and the local costs and global gains of international policy cooperation. To do so, we express and decompose welfare changes under different policy regimes to the first order as a function of sufficient statistics that depend on observables and identifiable elasticities like nations’ energy mix, energy rents, trade shares, energy supply and demand elasticities, and damage parameters. We show that climate change has non-trivial reallocation effects through international trade in goods and energy. Pursuing unilateral policies generates strong leakage effects, primarily through energy trade. Global climate policy cooperation mitigates leakage, but not all countries have an incentive to participate. Regional climate clubs operate differently: an EU-wide club reduces global emissions but creates internal winners and losers, while an ASEAN climate club achieves smaller global gains but delivers welfare increases for member nations.”