Business cycles, fossil energy and air pollutants: U.S. “stylized facts”

This paper, in its exploratory nature, develops a descriptive empirical analysis which tries to capture the “regularities” underlying the relationship between the economy, fossil energy use and anthropogenic air pollutants at business cycle frequency. The analysis uses as framework the economy of the United States in the period 1990–2019. The results are organized in terms of “stylized facts” which, in their essential nature, provide a rough idea of the cyclical interactions between the variables of interest. In addition to this, they also act as a benchmark to assess how well theoretical macroeconomic models are able to mimic the reality. A first result is the relatively high volatility characterizing both fossil energy use and air pollutants with respect to the business cycle. A second result is the moderately high procyclicality between fossil energy use, in particular oil, and the business cycle. Among air pollutants, CO2 and CO share a moderately high level of procyclicality. With few exceptions, the other pollutants are only weakly associated with the business cycle.