Abstract
We analyze the evolution across time of CO2 emissions in the European Union (EU) using advanced econometric techniques in time series analysis. We estimate the time trends along with the orders of integration of series corresponding to global CO2 emissions in EU member states using both parametric and semiparametric methods. The results show that there is a significantly negative trend only in the case of the UK, this being also a country where the trend shows mean reversion. At the other extreme, Spain, Italy, Greece and Bulgaria are some of the countries where CO2 emissions show positive trends and orders of integration that are substantially above unity. Moreover, we examine the CO2 emissions of the EU as a whole, China and the US, finding some support for mean reversion only in the second case. Therefore, there is less urgent need for policy reforms in the U.K. and somehow China than in the rest of the EU or the US.
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Notes
See the World Energy Outlook of the IEA (2016).
Note that the time series for EU-28 sums up the data for all of its 28 member countries only from the early 1990s—when data are available for all the countries—onwards. Therefore, the EU-28 series must reflect some other kinds of estimations when it comes to the period preceding the 1990s.
Though AIC and BIC can be used in this context, these criteria might not be appropriate with fractional integration since they may not give sufficient attention to the long-run properties of the models. See, for instance, Hosking (1981, 1984). Beran et al. (1998) propose versions of the AIC, BIC and the HQC (Hannan and Quinn 1979) in the case of fractional autoregressions but do not consider MA components.
The choice of the bandwidth number (i.e., m) in the semiparametric estimation of the differencing parameter is still an unresolved issue. It balances the trade-off between bias and variance. As m increases, the asymptotic variance of the estimator decreases while the bias grows larger.
Also these data are from the World Development Indicators database.
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Acknowledgements
The authors gratefully acknowledge the financial support received from the Ministerio de Economía y Competitividad: ECO2017-85503-R (Luis Alberiko Gil-Alana) and ECO 2015-68815-P (Tommaso Trani). Comments from the Editor and three anonymous reviewers are gratefully acknowledged.
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Gil-Alana, L.A., Trani, T. Time Trends and Persistence in the Global CO2 Emissions Across Europe. Environ Resource Econ 73, 213–228 (2019). https://doi.org/10.1007/s10640-018-0257-5
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DOI: https://doi.org/10.1007/s10640-018-0257-5