Testing the stationarity and convergence of CO2 emissions series in MENA countries

Abstract

PurposeThis study aims to investigate the stationarity and convergence of CO2 emissions series in MENA countries. The stationarity and unit root properties of per capita carbon dioxide (CO2) emissions series are explored by an increasing amount of studies, which use different methodologies. Examining the time series properties of energy and environmental series is crucial for both researchers and the policymakers, given the close link between energy, environment and the real economy. In fact, if energy exhibits the presence of a unit root, this suggests that this series does not revert to its equilibrium level after being hit by a shock.Design/methodology/approachThe contribution of this work is twofold. First, to the author’s knowledge, a very little attention has been paid to the topics of stationarity and convergence of CO2 emissions in the case of Middle East and North Africa (MENA) member states, especially in a panel context. Convergence analyses of CO2 emissions for MENA countries can improve the knowledge of energy and environmental scenario of the area, giving some ideas for appropriate future policies. Second, this is the first study that jointly analyzed time series and panel data properties of emissions series for these countries.FindingsThe author finds that relative per capita CO2 emissions in the 19 MENA countries are a mixture of I(0) and I(1) processes and there is a weak evidence to support the stationarity of CO2 emissions. After having verified the presence of cross-sectional dependence in the series, the panel unit root tests in presence of cross-section dependence show strong evidence in favor of non-stationarity. In addition, after performing tests for ß-convergence, it is also found that per capita CO2 emissions are converging on average in 11 out of 19 sample’s countries, while s-convergence analysis reveals that the variance of per capita CO2 emissions decreased over time, which is an indication of convergence.Originality/valueImportant policy implications emerge from the empirical results. Sustainable environmental and energy policies rely heavily on the CO2 series’ properties. In this regard, determining whether shocks to CO2 emissions are permanent or transitory is important for setting feasible goals for sustainable environmental policies. Given that per capita CO2 emissions are essentially associated with a quality of life, the issues of their reduction have been the leading agenda in energy and environmental management over the past two decades.