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

Area of Science:

• Environmental Economics
• Econometrics

Background:

• Existing research on stochastic emission convergence often overlooks smooth structural changes.
• Understanding emission convergence is crucial for effective environmental policy and management.

Purpose of the Study:

• To investigate the validity of stochastic convergence in carbon emissions across various income levels.
• To address the limitation of previous studies by incorporating smooth structural changes.

Main Methods:

• Utilized a recently proposed Fourier-based wavelet augmented Dickey-Fuller test.
• Employed a methodology that accounts for smooth structural shifts in time series data.

Main Results:

• Carbon emissions per capita exhibit stationarity in high-income (35 countries) and upper-middle-income countries (27 countries).
• Stationarity in carbon emissions per capita was also confirmed for lower-middle-income (30 countries) and low-income countries (13 countries).

Conclusions:

• Stochastic convergence of carbon emissions is valid across all income groups.
• Empirical findings offer significant implications for environmental planning and management strategies globally.