Persistence, mean-reversion and non-linearities in emissions : evidence from the BRICS and G7 countries

Abstract

This study examines the time-series behaviour of CO2 emissions within a long-memory approach with non-linear trends and structural breaks, using a long span of data for the BRICS and G7 countries. The main results show significant differences both in the degree of integration and the non-linearities among the analysed countries. Thus, in most of the cases, the CO2 emissions series display orders of integration equal to or higher than 1, implying that there are permanent effects of shocks for CO2 emissions. The only exceptions are Germany, the US and the UK, where shocks will have transitory effects. With respect to the non-linearities, more evidence of non-linear behaviour was obtained for the G7 countries, especially in the cases of the US, the UK, Germany and France. Partial evidence was also found in Canada and India. The significantly different results obtained for emerging and developed economies have important policy implications.