Fractional Integration Versus Structural Change: Testing the Convergence of $$\hbox {CO}_{2}$$ Emissions

This paper assesses the stochastic convergence of relative \(\hbox {CO}_{2}\) emissions within 28 OECD countries over the period 1950–2013. Using the local Whittle estimator and some of its variants we assess whether relative per capita \(\hbox {CO}_{2}\) emissions are long memory processes which, although highly persistent, may revert to their mean/trend in the long run thereby indicating evidence of stochastic convergence. Furthermore, we test whether (possibly) slow convergence or the complete lack of it may be the result of structural changes to the deterministics of each of the relative per-capita emissions series by means of the tests of Berkes et al. (Ann Stat 1140–1165, 2006) and Mayoral (Oxford Bull Econ Stat 74(2):278–305, 2012). Our results show relatively weak support for stochastic convergence of \(\hbox {CO}_2\) emissions, indicating that only between 30 and 40% of the countries converge to the OECD average in a stochastic sense. This weak evidence disappears if we enlarge the sample to include 4 out of the 5 BRICS, indicating that our results are not robust to the inclusion of countries which are experiencing rates of growth which are far larger than those of the OECD members. Our results also decisively indicate that a slow or lack of convergence is not the results of a structural break in the relative \(\hbox {CO}_{2}\) emissions series.     

Structural Change and Long‐run Relationships between US and EU Wheat Export Prices

This paper analyses the nature of the long‐run relationship between US and EU wheat export prices over the period 1981–2000. We employ a novel approach of testing for cointegration with structural change developed by Barassi and Taylor (A Test for Change in the Cointegrating Rank, University of Birmingham, Birmingham, 2004). The method enables us to determine the breakpoint, which is found to occur after the 1992 CAP reforms were implemented. On analysing the two separate subperiods, we find no evidence of a long‐run relationship prior to the 1992 CAP reform. However, clear evidence of a long‐run relationship is found after the CAP reforms were implemented. Further analysis reveals that, in the post‐CAP reform period, the EU wheat prices follow then US soft wheat prices, consistent with the EU export subsidy regime over this period, albeit that export subsidies by the EU have been relatively small.     

Stochastic Divergence or Convergence of Per Capita Carbon Dioxide Emissions: Re-examining the Evidence

This paper revisits the time-series literature on the convergence of per capita carbon dioxide (CO₂) emissions and examines the robustness of previous results. Using a sample of OECD countries for the period 1950–2002 we employ a battery of stationarity and unit root tests including those that allow for cross-sectional dependencies within the panel. We also correct for inaccuracies in previous studies that could result in a trend-stationary series being labelled as converging even if it were actually diverging from the international average. The body of evidence provided by our analysis suggests that per capita CO₂ emissions have not converged among OECD countries during the period under consideration. This finding is of importance to both climate change policy makers and to those who construct climate change models.