Environmental and Resource Economics

, Volume 40, Issue 1, pp 121–137 | Cite as

Stochastic Divergence or Convergence of Per Capita Carbon Dioxide Emissions: Re-examining the Evidence

  • Marco R. Barassi
  • Matthew A. Cole
  • Robert J. R. Elliott


This paper revisits the time-series literature on the convergence of per capita carbon dioxide (CO2) emissions and examines the robustness of previous results. Using a sample of OECD countries for the period 1950–2002 we employ a battery of stationarity and unit root tests including those that allow for cross-sectional dependencies within the panel. We also correct for inaccuracies in previous studies that could result in a trend-stationary series being labelled as converging even if it were actually diverging from the international average. The body of evidence provided by our analysis suggests that per capita CO2 emissions have not converged among OECD countries during the period under consideration. This finding is of importance to both climate change policy makers and to those who construct climate change models.


Convergence Carbon Dioxide Stationarity Unit roots 

JEL Classification

C22 Q54 Q56 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aldy JE (2006a). Per capita carbon dioxide emissions: convergence or divergence?. Environ Resour Econ 33(4): 533–555 CrossRefGoogle Scholar
  2. Aldy JE (2006b) Divergence in state-level per capita carbon dioxide emissions. Resources for the Future Discussion Paper 06–07Google Scholar
  3. Barro RJ and Sali-i-Martin X (1991). Convergence across states and regions. Brookings Papers on Econ Activity 1: 107–182 CrossRefGoogle Scholar
  4. Bodansky D (2004). International climate efforts beyond 2012: A survey of approaches. Pew Centre on Global Climate Change, Arlington, VA Google Scholar
  5. Böhringer C and Welsch (2004). Contraction and convergence of carbon emissions: An intertemporal multi-region CGE analysis. J Policy Model 26(1): 26–39 CrossRefGoogle Scholar
  6. Brock WA, Taylor MS (2004) The Green Solow Model, NBER Working Paper No. 10557Google Scholar
  7. Carlino G and Mills L (1993). Are U.S. regional economies converging? A time series analysis. J Monetary Econ 32: 335–346 CrossRefGoogle Scholar
  8. Choi I (2001). Combination unit root tests for cross sectionally correlated panels. J Int Money Finance 20: 249–272 CrossRefGoogle Scholar
  9. Hadri K (2000). Testing for stationarity in heterogeneous panel data. Econ J 3: 148–161 Google Scholar
  10. Harris D, McCabe BPM and Leybourne SJ (2003). Some limit theory for infinite order autocovariances. Econ Theory 19: 829–864 CrossRefGoogle Scholar
  11. Harris D, Leybourne SJ and McCabe BPM (2005). Panel stationarity tests for purchasing power parity with cross-sectional dependence. J Busi Econ Stat 23: 395–409 CrossRefGoogle Scholar
  12. Heil MT, Wooden QT (1999) Future inequality in carbon dioxide emissions and the projected impact of abatement proposals. World Bank Policy Research Working Paper No. 2084, Scholar
  13. Heil MT and Selden TM (1999). Panel stationarity with structural breaks: carbon emissions and GDP. Appl Econ Lett 6: 223–225 CrossRefGoogle Scholar
  14. Im KS, Pesaran MH and Shin Y (2003). Testing for unit roots in heterogeneous panels. J Econ 115: 53–74 Google Scholar
  15. Intergovernmental Panel on Climate Change (2001) Climate change 2001, synthesis report, IPCC report. Scholar
  16. Kwiatkowski D, Phillips PCB, Schmidt P and Shin Y (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: how sure are we that economic time series have a unit root?. J Econ 54: 159–178 Google Scholar
  17. Lanne M and Liski M (2004). Trend and breaks in per-capita carbon dioxide emissions, 1870–2028. Energy J 25(4): 41–65 Google Scholar
  18. List JA (1999). Have air pollutant emissions converged amongst U.S. regions? Evidence from unit-root tests. South Econ J 66: 144–155 CrossRefGoogle Scholar
  19. Mankiw NG, Romer D and Weil DN (1992). A contribution to the empirics of economic growth. Q J Econ 107: 407–437 CrossRefGoogle Scholar
  20. Marland G, Boden TA, Andres RJ (2003) Global, regional, and national fossil fuel CO2 emissions. Trends: a compendium of data on global change. Carbon Dioxide Informational Analysis Centre (CDIAC) Oak Ridge National Laboratory, US Department of Energy, Oak Ridge, Tennessee, USAGoogle Scholar
  21. Meyer A (2000). Contraction and convergence: the global solution to climate change. Schumacher briefings. Green Books, Bristol, UK Google Scholar
  22. Moon HR and Perron B (2004). Testing for a unit root in panels with dynamic factors. J Econ 122: 81–126 Google Scholar
  23. Ng S and Perron P (2001). Lag length selection and the construction of unit root tests with good size and power. Econometrica 69: 1519–1554 CrossRefGoogle Scholar
  24. Nguyen-Van P (2005). Distribution dynamics of CO2 lag length selection and the construction of unit root tests with good size and power. Econometrica 69: 1519–1554 Google Scholar
  25. Nieswiadomy ML and Strazicich MC (2004). Are political freedoms converging?. Econ Inquiry 42(2): 323–340 CrossRefGoogle Scholar
  26. O’Connell PGJ (1998). The overvaluation of purchasing power parity. J Int Econ 44: 1–19 CrossRefGoogle Scholar
  27. Pearce F (2003). Saving the world, plan B. New Scientist 180(2425): 6–7 Google Scholar
  28. Perron P (1989). The great crash, the oil price shock and the unit root hypothesis. Econometrica 57(6): 1361–1401 CrossRefGoogle Scholar
  29. Pesaran MH (2004) General diagnostic tests for cross-section dependence in panels. IZA Discussion Paper Series, DP n. 1240Google Scholar
  30. Phillips PCB and Perron P (1988). Testing for unit roots in time series. Biometrika 75: 335–346 CrossRefGoogle Scholar
  31. Phillips PCB and Sul D (2003). Dynamic panel estimation and homogeneity testing under cross sectional depenedence. Econ J 6: 217–259 Google Scholar
  32. Quah D (1996). Empirics for economic growth and convergence. Eur Econ Rev 40: 1353–1375 CrossRefGoogle Scholar
  33. Quah D (1997). Empirics for growth and distribution: stratification, polarization and convergence clubs. J Econ Growth 2: 27–59 CrossRefGoogle Scholar
  34. Rappoport P and Reichlin L (1989). Segmented trends and non-stationary time series. Econ J 99(395): 168–77 CrossRefGoogle Scholar
  35. Stegman A, McKibbin WJ (2005) Convergence and per capita emission. Brookings Discussion Papers in International Economics. no. 167Google Scholar
  36. Strazicich MC and List JA (2003). Are CO2 emission levels converging among industrial countries?. Environ Resour Econ 24: 263–271 CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

  • Marco R. Barassi
    • 1
  • Matthew A. Cole
    • 1
  • Robert J. R. Elliott
    • 1
  1. 1.Department of EconomicsUniversity of BirminghamBirminghamUK

Personalised recommendations