Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-13T07:02:01.923Z Has data issue: false hasContentIssue false

Are per capita carbon dioxide emissions converging among industrialized countries? New time series evidence with structural breaks

Published online by Cambridge University Press:  01 August 2008

CHUN-PING CHANG
Affiliation:
Department of Business Administration, Shih Chien University Kaohsiung Campus, Kaohsiung, Taiwan
CHIEN-CHIANG LEE
Affiliation:
Department of Applied Economics, National Chung Hsing University, Taichung, Taiwan. Email: [email protected]

Abstract

This paper examines whether the stochastic convergence hypothesis of per capita carbon dioxide (CO2) emissions is supported in countries with the same level of development – that is, are shocks to relative per capita CO2 emissions temporary in industrialized countries? We respond to this question by utilizing the recently developed Lagrange Multiplier (LM) unit root test that endogenously determines structural breaks in level and trend as proposed by Lee and Strazicich (2003, 2004). Our empirical findings provide significant evidence that relative per capita CO2 emissions for 21 OECD countries stochastically converge when we control for breaks in the period 1960–2000. Structural breaks are identified in each country, and overall we find that most breakpoints occur around the two energy crises and in the 1990s. The robust test clearly also indicates that most original per capita CO2 emissions and average series are stationary.

Type
Research Article
Copyright
Copyright © Cambridge University Press 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aldy, J.E. 2006, ‘Per capita carbon dioxide emissions: convergence or divergence?’, Environmental and Resource Economics 33: 533555.CrossRefGoogle Scholar
Ben-David, D. and Papell, D.H. 2000, ‘Some evidence on the continuity of the growth process among the G7 countries’, Economic Inquiry 38: 320330.CrossRefGoogle Scholar
Böhringer, C. and Welsch, H. 2004, ‘Contraction and convergence of carbon emissions: an intertemporal multi-region CGE analysis’, Journal of Policy Modeling 26: 2139.CrossRefGoogle Scholar
Carlino, G.A. and Mills, L.O. 1993, ‘Are US regional incomes converging? A time series analysis’, Journal of Monetary Economics 32: 335346.CrossRefGoogle Scholar
Carlino, G.A. and Mills, L.O. 1996, ‘Testing neoclassical convergence in regional incomes and earnings’, Regional Science and Urban Economics 26: 565590.CrossRefGoogle Scholar
Dickey, D.A. and Fuller, W.A. 1979, ‘Distribution of the estimators for autoregressive time series with a unit root’, Journal of the American Statistical Association 74: 427431.Google Scholar
Elliott, G., Rothenberg, T.J., and Stock, J.H. 1996, ‘Efficient tests for an autoregressive unit root’, Econometrica 64: 813836.CrossRefGoogle Scholar
Ezcurra, R. 2007, ‘Is there cross-country convergence in carbon dioxide emissions?’, Energy Policy 35: 13631372.CrossRefGoogle Scholar
Friedl, B. and Getzner, M. 2003, ‘Determinants of CO2 emissions in a small open economy’, Ecological Economics 45: 133148.CrossRefGoogle Scholar
Galeotti, M. and Lanza, A. 2005, ‘Desperately seeking environmental Kuznets’, Environmental Modelling and Software 20: 13791388CrossRefGoogle Scholar
Grubb, M. and Sebenius, J.K. 1991, ‘Participation, allocation and adaptability in international tradable emission permit systems for greenhouse gas control’, Paper Prepared for OECD Workshop on Tradeable Greenhouse Gas Permits, Paris, June.Google Scholar
Im, K.S., Pesaran, M.H., and Shin, Y. 2003, ‘Testing for unit roots in heterogeneous panels’, Journal of Econometrics 115: 5374.CrossRefGoogle Scholar
Jewell, T., Lee, J., Tieslau, M., and Strazicich, M.C. 2003, ‘Stationarity of health expenditures and GDP: evidence from panel unit root tests with heterogeneous structural breaks’, Journal of Health Economics 22: 313323.CrossRefGoogle ScholarPubMed
Kanjilal, K. and Ghosh, S. 2002, ‘Future industrial CO2 emission and consequences of CO2 abatement strategies on the Indian economy’, Pacific and Asian Journal of Energy 12: 123128.Google Scholar
Lanne, M. and Liski, M. 2004, ‘Trends and breaks in per-capita carbon dioxide emissions, 1870–2028’, Energy Journal 25: 4165.CrossRefGoogle Scholar
Lee, C.C. and Chang, C.P. 2008a, ‘Unemployment hysteresis in OECD countries: centurial time series evidence with structural breaks’, Economic Modelling 25: 312325.CrossRefGoogle Scholar
Lee, C.C. and Chang, C.P. 2008b, ‘Are CO2 emission levels converging among industrial countries? New evidence from the unit root structural break test’, forthcoming in Applied Economics Letters.CrossRefGoogle Scholar
Lee, J. and Strazicich, M.C. 2003, ‘Minimum Lagrange Multiplier unit root test with two structural breaks’, Review of Economics and Statistics 85: 10821089.CrossRefGoogle Scholar
Lee, J. and Strazicich, M.C. 2004, ‘Minimum LM unit root test with one structural break’, Appalachian State University, Department of Economics, Working Paper, No. 2004/17.Google Scholar
Lee, J., List, J.A., and Strazicich, M.C. 2006, ‘Non-renewable resource prices: deterministic or stochastic trends?’, Journal of Environmental Economics and Management 51: 354370.CrossRefGoogle Scholar
Lindmark, M. 2004, ‘Patterns of historical CO2 intensity transitions among high and low-income countries’, Explorations in Economic History 41: 426447.CrossRefGoogle Scholar
List, J.A. 1999, ‘Have air pollutant emissions converged among US regions? Evidence from unit root tests’, Southern Economic Journal 66: 144155.Google Scholar
Lumsdaine, R.L. and Papell, D.H. 1997, ‘Multiple trend breaks and the unit-root hypothesis’, The Review of Economics and Statistics 79: 212218.CrossRefGoogle Scholar
McKibbin, W.J. and Stegman, A. 2005, ‘Convergence and per capita carbon emissions’, Brookings Discussion Papers in International Economics, No. 167.Google Scholar
McKitrick, R. and Strazicich, M.C. 2005, ‘Stationarity of global per capita carbon dioxide emissions: implications for global warming scenarios’, University of Guelph, Department of Economics, Working paper, No. 2005/03.Google Scholar
Narayan, P.K. 2005, ‘The structure of tourist expenditure in Fiji: evidence from unit root structural break tests’, Applied Economics 37: 11571161.CrossRefGoogle Scholar
Ng, S. and Perron, P. 2001, ‘Lag length selection and the construction of unit root tests with good size and power’, Econometrica 69: 15191554.CrossRefGoogle Scholar
Nguyen-Van, P. 2005, ‘Distribution dynamics of CO2 emissions’, Environmental and Resource Economics 32: 495508.CrossRefGoogle Scholar
Papell, D.H., Murray, C.J., and Ghiblawi, H. 2000, ‘The structure of unemployment’, The Review of Economics and Statistics 82: 309315.CrossRefGoogle Scholar
Payne, J., Lee, J., and Hofler, R. 2005, ‘Purchasing Power Parity: evidence from a transition economy’, Journal of Policy Modeling 27: 665672.CrossRefGoogle Scholar
Perron, P. 1989, ‘The great crash, the oil price shock and the unit root hypothesis’, Econometrica 57: 13611401.CrossRefGoogle Scholar
Phillips, P.C.B. and Perron, P. 1988, ‘Testing for a unit root in time series regression’, Biometrika 75: 335346.CrossRefGoogle Scholar
Quah, D.T. 1997, ‘Empirics for growth and distribution: stratification, polarization, and convergence clubs’, Journal of Economic Growth 2: 2759.CrossRefGoogle Scholar
Sathiendrakumar, R. 2003, ‘Greenhouse emission reduction and sustainable development’, International Journal of Social Economics 30: 12331248.CrossRefGoogle Scholar
Schmidt, P. and Phillips, P.C.B. 1992, ‘LM tests for a unit root in the presence of deterministic trends’, Oxford Bulletin of Economics and Statistics 54: 257287.CrossRefGoogle Scholar
Sen, A. 2003, ‘On unit-root tests when the alternative is a trend-break stationary process’, Journal of Business and Economics Statistics 21: 174184.CrossRefGoogle Scholar
Shafik, N. 1994, ‘Economic development and environmental quality: an econometric analysis’, Oxford Economic Papers 46: 757773.CrossRefGoogle Scholar
Smyth, R. and Inder, B. 2004, ‘Is Chinese provincial real GDP per capita nonstationary? Evidence from multiple trend break unit root tests’, China Economic Review 15: 124.CrossRefGoogle Scholar
Stern, D.I., Common, M.S., and Barbier, E.B. 1996, ‘Economic growth and environmental degradation: the environmental Kuznets curve and sustainable development’, World Development 24: 11511160.CrossRefGoogle Scholar
Strazicich, M.C. and List, J.A. 2003, ‘Are CO2 emission levels converging among industrial countries?’, Environmental and Resource Economics 24: 263271.CrossRefGoogle Scholar
Strazicich, M.C., Lee, J., and Day, E. 2004, ‘Are incomes converging among OECD countries? Time series evidence with two structural breaks’, Journal of Macroeconomics 26: 131145.CrossRefGoogle Scholar
Sun, L. and Wang, M. 1996, ‘Global warming and global dioxide emission: an empirical study’, Journal of Environmental Management 46: 327343.CrossRefGoogle Scholar
Welsch, H. 1993, ‘A CO2 agreement proposal with flexible quotas’, Energy Policy 21: 748756.CrossRefGoogle Scholar
Westerlund, J. and Basher, S.A. 2007, ‘Testing for convergence in carbon dioxide emissions using a century of panel data’, forthcoming in Environmental and Resource Economics.CrossRefGoogle Scholar
WDI 2004, World Development Indicators, Washington, DC: World Bank.Google Scholar
Zivot, E. and Andrews, D.W.K. 1992, ‘Further evidence on the great crash, the oil-price shock, and the unit-root hypothesis’, Journal of Business and Economic Statistics 20: 2544.CrossRefGoogle Scholar