The intertemporal substitution effect of energy consumption under climate policy changes

Based on the intertemporal substitution effect, high inflation expectations can stimulate agents to consume now rather than in future. However, under background of global climate policy changes, how affect energy consumption? Using bootstrap Granger full-sample causality test and sub-sample rolling window tests, this study examines effect consumption U.S. The results based data indicate no between consumption, which suggests that does not exist. Nevertheless, method estimates a time-varying identifies short-lived positive effects distinct sub-period before Paris agreement, but disappears since then. Therefore, regarding exist pressing carbon targets. be or negative, tells cautionary tale about policies aiming at engineering lower emissions.