Stochastic Divergence or Convergence of

Per Capita Carbon Dioxide Emissions:

Re-examining the Evidence

Marco R. Barassi, Matthew A. Cole and Robert J.R. Elliott

University of Birmingham, UK

Abstract

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 trendstationary 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.

JEL: C22; Q54; Q56

Keywords: Convergence, Carbon Dioxide, Stationarity, Unit Roots

Cole and Elliott gratefully acknowledge the support of Leverhulme Trust grant number F/00094/AG. We are also grateful to Kenichi Shimamoto for his research assistance.