Effect of green bonds, oil prices, and COVID-19 on industrial CO2 emissions in the USA: Evidence from novel wavelet local multiple correlation approach

This study explores the effect of green bonds, oil prices, and the coronavirus disease 2019 (COVID-19) pandemic on industrial carbon dioxide (CO2) emissions. In this context, this study examines the United States of America (USA), which is the biggest economy in the world, uses weekly data between March 6, 2020 and September 30, 2022, and applies a novel wavelet local multiple correlation (WLMC) approach under time-varying and frequency-varying perspective. The novel empirical findings shows that (i) there is a strong negative (positive) co-movement between industrial CO2 emissions and green bonds in the short-run (long-run); (ii) there is a strong positive (negative) co-movement between industrial CO2 emissions and oil price in the medium-run (long-run); (iii) there is a strong negative (positive) co-movement between industrial CO2 emissions and the COVID-19 pandemic in the medium-run (long-run); (iv) the oil price is the dominant factor, whereas there are changing effect of the variables on each other at different times and frequencies; and (vi) overall, there are long-run asymmetric and dynamic correlations between industrial CO2 emissions and variables. Hence, the empirical results highlight the asymmetric, time-varying, and frequency-varying effects of green bonds, oil prices, and the COVID-19 pandemic on industrial CO2 emissions by presenting fresh and novel evidence. Moreover, the study proposes policy implications for the USA government.

Automated summary

This study investigates the impact of green bonds, oil prices, and the COVID-19 pandemic on industrial CO2 emissions. Using the USA as a case study and employing a novel wavelet local multiple correlation approach, the study examines weekly data from March 6, 2020 to September 30, 2022. The empirical findings reveal asymmetric, time-varying, and frequency-varying relationships between industrial CO2 emissions and the variables, shedding light on their effects and providing policy implications for the USA government.