Convergence in Per Capita Carbon Dioxide Emissions Among G7 Countries: A TAR Panel Unit Root Approach

Abstract

The subject of this paper is the examination the convergence of per capita carbon dioxide emissions of the G7 countries during the 1960-2005 period in a nonlinear panel analysis framework. In this approach, first the linearity of the series was tested, and when the linearity was rejected, the threshold autoregressive (TAR) panel unit root test, which splits the data into two regimes, was employed to examine the stationarity properties of the series. Because the null of linearity was rejected in the first step, we tested the stationarity of the series using the TAR panel unit root test. In the TAR panel unit root test, we found that the United Kingdom was the transition country whose per capita carbon dioxide (CO2) emissions determined the switch from one regime to the other. The results showed that convergence existed in the first regime and divergence, in the second. When we tested whether absolute or conditional convergence existed, we found that the per capita CO2 emissions were conditionally converging in the first regime.