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On the convergence of per capita carbon dioxide emission: a panel unit root test with sharp and smooth breaks

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Abstract

This study aims to examine the stochastic convergence of per capita carbon dioxide (CO2) emissions in 21 OECD countries and 19 emerging market economies. After approximating both sharp and smooth breaks, the panel unit root tests are performed to test the convergence. The empirical results suggest stochastic convergence for the two groups of countries. However, the results are different when tests for individual countries are conducted separately. Specifically, CO2 emissions of only four OECD countries and four emerging market economies show evidence of convergence if smooth breaks are not considered. With the inclusion of both sharp and smooth breaks, convergence is observed for 11 OECD countries and 10 emerging market economies. These findings may have implications for climate change policy making in selected economies.

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Notes

  1. As suggested by Strazicich and List (2003), the β convergence test could be obtained through the regression of annual growth rate of per capita CO2 emissions against the initial level of per capita CO2 emissions. The coefficient of the initial level of per capita CO2 emission term denotes β and if β < 0, we infer that the series is convergent. Moreover, the σ convergence denotes a decrease in the cross-sectional variation of the variable in natural log form (Panopoulou and Pantelidis, 2009).

  2. As suggested by Cai and Menegaki (2019b), using Fourier terms can provide better approximate potential unknown smooth breaks in clean energy consumption. In this paper, we follow Cai and Menegaki (2019a) to incorporate both sharp and smooth breaks in unit root tests to examine the CO2 emission per capita.

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Correspondence to Yanrui Wu.

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Appendix Climate change policies

Appendix Climate change policies

Table 6 Climate change policies among OECD countries
Table 7 Climate change policies among emerging countries

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Cai, Y., Wu, Y. On the convergence of per capita carbon dioxide emission: a panel unit root test with sharp and smooth breaks. Environ Sci Pollut Res 26, 36658–36679 (2019). https://doi.org/10.1007/s11356-019-06786-4

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