Energy use–GDP deterministic cointegration: progress towards EU-15 Kyoto targets

Abstract

This article examines whether the energy consumption–GDP relationship is in long-term equilibrium for EU-15 countries. Unlike many previous works, we apply a nonlinear unit root test introduced by Kapetanios et al. (2003a) and extended by Chong et al. (2008) that identifies not only deterministic cointegration, but also the stronger concept of stochastic cointegration. The results yield a clear pattern: Austria, Denmark, Italy, the Netherlands, Portugal and Spain must achieve greater emissions reductions between 2009 and 2012 to reach their respective Kyoto targets.

Keywords:

• CO₂ emissions
• Kyoto targets
• cointegration
• energy consumption

JEL Classification:

• C22
• Q51

Notes

¹ We set the variable where H takes the following values: 1 2 4 6 8 12 14 16 18 20 22 24 26 28 30.

Additional information

Funding

J. Ordoñez and M. Camarero gratefully acknowledge the financial support from the UJI project [P1-1B2014-17]. The authors also acknowledge the support from the Generalitat Valenciana project [PROMETEO/2009/098] and Spanish Ministry of Economics and Competitiveness project [ECO2014-58991-C3-2-R]. They are members of the INTECO research group. The usual disclaimer applies.