Is carbon dioxide emission convergence in the ten largest economies?

ABSTRACT

This study applies stationary test with a flexible Fourier function proposed by Enders and Lee (Enders, W. and J. Lee. 2012. Oxford Bulletin of Economics and Statistics 74:574–99) to test the validity of carbon dioxide emission to assess its convergence, and the rationality of the existing policies in the 10 largest economies of the world. We find that our approximation has higher power to detect smooth breaks than the linear method, as the true data generating process of carbon dioxide emission convergence is in fact a stationary nonliner process. We examine the validity of carbon dioxide emission from the nonlinear point of view and provide robust evidence that clearly indicates that carbon dioxide emission is convergence in most countries, not depending on their development pattern. It implies that the existing policies in most countries are rational, and the United States, Japan, and Germany need more efforts in reducing the carbon dioxide emission.

KEYWORDS:

• Carbon dioxide emission
• Fourier stationary test
• ten largest economies

Notes

¹ Carbon dioxide is considered as the most important human-influenced greenhouse gas for climate analyses and policy targeting because it accounts for around 2/3 of the greenhouse gas radiative forcing (the enhancement of the greenhouse effect), and because it is relatively easy to monitor. Fossil fuels account for around 3/4 of anthropogenic carbon dioxide emissions (Bigio 2003).

Additional information

Funding

This research is supported by the National Social Science Foundation (Grant number: 15BJY155) and Ministry of Education’s Humanities and Social Science Research Project (Grant number: 14YJA790049).