Is Economic Volatility Detrimental toGlobal Sustainability?
4CMR, Department of Land Economy, University of Cambridge19 Silver Street, Cambridge CB3 9EPMarch 8, 2010
This paper examines the e
ects of economic volatility on globalsustainability in a dynamic panel data model allowing for error crosssection dependence. It
nds that output volatility and
nancial marketvolatility exert strong negative impacts on sustainable development,with the impacts exacerbated in some subsamples such as higher en-ergy intensity countries and lower trade share countries. The paperalso identi
nancial development channel through which outputvolatility impedes global sustainability, highlighting the interaction be-tween global
nancial markets and the wider economy as a key factorin
uencing the low carbon development path. The
nding is signi
-cant for the conduct of macroeconomic and environmental policies inan integrated global green economy.
Output Volatility; Financial Market Volatility; GlobalSustainability; Genuine Savings; Cross Section Dependence
cation: E32; O11; O16
I am very grateful to Vasilis Sara
dis, Philip Arestis, and Unai Pascual for theirconstructive comments and suggestions. I would also like to thank two Tyndall Centrereferees, 4CMR colleagues and seminar participants at the Department of Land Economyof Cambridge University for helpful comments and discussions. The usual disclaimerapplies.
Correspondence: Email: firstname.lastname@example.org; Tel: 0044-1223 764873; Fax: 0044-1223337130; URL: http://www.landecon.cam.ac.uk/yh279/huangyf.htm.