|
| |
| Sanjay B Singh |
| |
| ''The impact of u.s. monetary policy on carbon emissions: evidence from a TVP-VAR model with stochastic volatility'' |
| ( 2025, Vol. 45 No.1 ) |
| |
| |
| This study investigates the impact of U.S. monetary policy on carbon emissions using a Time-Varying Parameter Vector Autoregression (TVP-VAR) model with stochastic volatility, applied to quarterly data from 1973:Q1 to 2024:Q4. The findings indicate that a one percentage point increase in the interest rate leads to a reduction in emissions of 27.73 million metric tons (MMT) in 2001:Q1, 25.55 MMT in 2007:Q4, and 18.18 MMT in 2019:Q4, demonstrating a declining effect of monetary policy on emissions over time. These results highlight the evolving nature of monetary transmission and suggest that structural changes in the economy have weakened the environmental channel through which interest rate policy influences carbon outcomes. The study offers new insights for central banks seeking to align macroeconomic and climate goals. |
| |
| |
| Keywords: TVP-VAR with stochastic volatility, monetary policy, and carbon emissions |
JEL: C3 - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions
E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General |
| |
| Manuscript Received : Jul 23 2024 | | Manuscript Accepted : Mar 30 2025 |
|
