Key takeaway: short-run macroeconomic dynamics matter for climate outcomes.

The model offers a flexible framework to explore economy-ecology feedbacks - and to test policies for faster, more effective decarbonization.

Read it here: doi.org/10.1016/j.st...

🌍 The model is simulated using U.S. data.

📉 When climate damages are introduced (e.g. via extreme events), they dampen booms and sharpen downturns, limiting the positive impact of the green transition.

5/

🔧 The model allows for both coupling and decoupling between GDP and emissions, capturing dynamics observed in advanced vs. emerging economies.

4/

🟢 Green investment can be either emissions-reducing or emissions-enhancing, depending on timing, scale, and the interaction with business cycle and emission dynamics.

3/

The paper builds on Goodwin’s 1951 business cycle model, modeling the transition from brown to green investment as a logistic diffusion process.
This allows to explore the procyclical behavior of emissions and the conditions for (de)coupling.

2/

What are the effects of transitioning to green investment on business cycles and CO₂ emissions?

Most climate-economic models focus on long-run dynamics.
This paper tackles a missing link: the short-run interaction between green investment, emissions, and business cycles.

1/

The result?
A trend-cum-cycle model where fluctuations persist endogenously, while long-run growth remains demand-led.
This bridges business cycle theory with supermultiplier models! 🔄📈

#MacroEcon #BusinessCycles #EconomicGrowth

3/3

The paper deals with the question of how to reconcile short-run cycles with long-run growth in a unified framework.
I develop a model showing how investment-driven cycles can work alongside autonomous demand-led growth.

2/3