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

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.