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Is globalisation linked to CO2 emission? Evidence from OECD nations

Abstract

An extensive number of studies uses trade-to-GDP as a proxy for globalisation in environmental research. Globalisation encompasses much more than just trade in goods. Globalisation is the integration of various countries and includes spillovers of ideas and technology, financial flows, the worldwide movement of labour, and national governments meeting on an international level in a bid to solve social and political problems. This study considers the effect of globalisation on carbon dioxide emissions by using a more flexible and comprehensive measure based on the KOF globalisation index for a panel of 21 OECD nations covering the period 1970–2014. Since the globalisation process is not uniform across countries and time, we use a fully-fledged nonparametric technique to estimate the time-varying coefficient and trend functions. Our results show that the effect of globalization on CO2 emissions is positive up until 2000, then switches to turns negative thereafter.

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Notes

  1. It should be noted that the kernel-based local linear regression employed in this paper only partially addresses the issue of cross-sectional dependence (CSD) by filtering out the unobserved cross-sectional factors through the inclusion of country-specific trends.

  2. https://kof.ethz.ch/en/forecasts-and-indicators/indicators/kof-globalisation-index.html.

  3. We also provide a plot of the trends of the control variables in Fig. A1 of the Appendix.

  4. Data on imports and exports (as a % of GDP) are obtained from WDI database.

  5. We would like to thank an anonymous reviewer for suggesting this.

  6. Available at http://www.globalcarbonatlas.org/en/CO2-emissions.

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Correspondence to Kris Ivanovski.

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Handling Editor: Pierre R. L. Dutilleul.

Appendix

Appendix

See Tables A1, A2, A3, A4, and A5 and Figs. A1, A2, A3, and A4.

Fig. A1
figure 6

CO2 emissions and control variables

Fig. A2
figure 7

Time-varying estimates: using trade shares (% GDP)

Fig. A3
figure 8

Time-varying estimates: using consumption-based CO2 emissions (Globalisation variables)

Fig. A4
figure 9

Changes in the level of average economic globalization index in OECD countries (%)

Table A1 Summary statistics
Table A2 CD and CIPS tests
Table A3 Panel unit root test with structural breaks
Table A4 Banerjee and Carrion‐i‐Silvestre (2015)
Table A5 Robustness: DCCEMG estimates

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Ivanovski, K., Hailemariam, A. Is globalisation linked to CO2 emission? Evidence from OECD nations. Environ Ecol Stat 29, 241–270 (2022). https://doi.org/10.1007/s10651-021-00520-5

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  • DOI: https://doi.org/10.1007/s10651-021-00520-5

Keywords

  • CO2 emissions
  • Globalisation
  • Nonparametric panel data