Are per capita carbon dioxide emissions converging among industrialized countries? New time series evidence with structural breaks

Abstract

This paper examines whether the stochastic convergence hypothesis of per capita carbon dioxide (CO 2) emissions is supported in countries with the same level of development – that is, are shocks to relative per capita CO 2 emissions temporary in industrialized countries? We respond to this question by utilizing the recently developed Lagrange Multiplier (LM) unit root test that endogenously determines structural breaks in level and trend as proposed by Lee and Strazicich (2003, 2004). Our empirical findings provide significant evidence that relative per capita CO 2 emissions for 21 OECD countries stochastically converge when we control for breaks in the period 1960–2000. Structural breaks are identified in each country, and overall we find that most breakpoints occur around the two energy crises and in the 1990s. The robust test clearly also indicates that most original per capita CO 2 emissions and average series are stationary.