Stochastic convergence in carbon emissions based on a new Fourier-based wavelet unit root test.

Abstract

Most of the existing studies on stochastic convergence of emission have not adequately considered smooth structural changes. The primary purpose of this paper is to examine the validity of stochastic convergence at different income levels by recently proposed Fourier-based wavelet augmented Dickey-Fuller test with smooth shifts. Empirical results can be summed up as follows: (i) carbon emission per capita follows the stationarity process in 35 high-income countries, while carbon emission per capita follows the stationarity process in 27 upper-middle-income countries; (ii) besides, carbon emission per capita follows stationarity process in 30 lower-middle-income countries, while carbon emission per capita follows stationarity process in 13 low-income countries; (iii) in light of these findings, it can be said that stochastic convergence among different income groups is valid. The implications of the empirical findings for environmental planning and management are discussed in the body of the paper.