Fact Or Fiction: The Relationship Between Carbon Linkage .

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CO2 environmental Kurzets curveEmpirical resultsFact or Fiction: The Relationship betweenCarbon Linkage and Carbon DioxideEnvironmental Kuznets CurveChien-Ho Wang1 Chang-Ching Lin2 Wan-Jiun Chen;3Chia-Hsiang Hsu;11 NationalTaipei University 2 Academia Sinica 3 Chinese Culture UniversityIPDC, 2014Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsOutline1CO2 environmental Kurzets curve2Empirical resultsThe results of EKCde-factor EKC curveChien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsGrossman and Krueger (1991,1995) found that the emissionsof greenhouse gas have inverted U-shape relationship with percapita GDP. This hypothesis is called environmental Kurzetscurve (EKC) hypothesis. If EKC hypothesis exist among allcountries, the hypothesis may use to regulate the greenhousegas reduction.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsSome greenhouse gases are in the atmosphere:1SO22NO3CO2Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThere are three characteristics in CO2 emissions:Different regions with different emissions (regionalconvergence)The developing countries have high CO2 emissions thanunderdeveloped countriesCarbon leakageChien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe study makes three major contributionsConstruct the EKC according to the regions that countriesare located in.Estimate the accurate EKC relationship with the commoncorrelated effectsExplain the reasons of cross-sectional dependence withcarbon leakageChien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe traditional panel EKC modelln eit αi θi t β1 ln yit β2 ln yit2 uit(1)The major concerns of choosing econometric methodsWhether the series of CO2 emissions and per capita GDPare both stationary?The cross-sectional dependence exist in the errors.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsWhen the panel EKC model exists cross-sectional dependence,the standard estimations of panel model, like Fixed of randomeffects, will generate the inconsistent estimates. We need touse different procedure.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveThe data on CO2 emissions was obtained from the CarbonDioxide Information Analysis Center (CDIAC), and GDP percapita was obtained from the Penn World Table Version 6.2.This study collected data related to GDP and CO2 emissions ofeach country from the period 1972 to 2003. The 94 countriesincluded in this study are located in Africa, America, Asia, andEurope.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveThe econometric methods:African Countries: Panel cointegration with cross-sectionalindependence (Kao and Chiang 1999).American, Asian and European countries: Panelregression with cross-sectional dependence (Pesaran2006)Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveOutline1CO2 environmental Kurzets curve2Empirical resultsThe results of EKCde-factor EKC curveChien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveBecause the CO2 emissions are with cross-sectionaldependence in three regions, we need to eliminate thecross-sectional dependencelneit αi θi t β1 lnyit β2 (lnyit )2 β3 lnet β4 lnyt β5 (lnyt )2 eit .(2)Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveOutline1CO2 environmental Kurzets curve2Empirical resultsThe results of EKCde-factor EKC curveChien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveIf a cross-sectional correlation exists in both CO2 and GDPseries, biases will occur in the estimation of the parameters.We use the two-stage methods proposed by Wagner (2009).lneit κ1i τ1i t τ11 lnet τ12 lnet η1it ,lnyit κ2i τ2i t τ21 lnyt τ22 lnyt η2it .We then extract the residuals η̂1it and η̂2it and use the twovariables for estimation in the EKC model.2η̂1it αi β1 η̂2it β2 η̂2it eit(3)Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveTable: LMadj statisticAsiaAfrica Europe Americaln eit 5.9633 0.1848 11.976 4.2011 ln yit 6.2531 -0.2171 26.003 7.0116 ab implies rejection of the null hypothesis at 5%.The critical value is 1.96.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveTable: IPS and Kao statistics for EKC curve ofAfrican countriesIPS statisticln eitln yit 1.4244 0.0772 0.1824 0.4276Kao panel cointegration statisticsDFρDFtADFab 30.8275 0.0000 19.9752 0.0000 7.5987 0.0000 IPS regression includes intercept and deterministic trend. implies rejection of the null hypothesis at 5%.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveTable: CIPS unit root statistics for differentregionsln eitln yitStatistics p-value Statistics 312-16.6140.0011 0.0002 0.0000 0.0000 -5.7512-6.3964-2.0659-11.51450.0000 0.0000 0.0194 0.0000 Equation includes intercept and deterministic trend. implies rejection of the null hypothesis at5%.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

Table: EKC estimation resultsAfricat-0.0044t-statistics -0.9204p(N)-value -0.01930.49230.00040.08070.4678ln yit-4.2323 2.5968 18.3459 9.7162t-statistics -3.4633 8.2460 20.2908 14.1225p(N)-value 0.0003 0.0000 0.0000 0.0000 (ln yit )20.3327 -0.1138 -0.9075 -0.5275t-statistics 4.0125 -6.0906 -19.9403 -13.3523p(N)-value 0.0000 0.0000 0.0000 0.0000 ln .61847.6228 0.0073 0.0000 0.0000 ln yitt-statisticsp(N)-value-2.7251 -17.9068 -7.1034-0.5468 -4.6415 -0.53450.2923 0.0000 0.2965(ln yit 69400.0000 3843R2Adj R 2a0.13010.1200Kao (1998) panel cointegration regression without cross-sectional dependence is used forAfrican countries.bEKC equation includes fixed effects.c implies rejection of the null hypothesis at 5%.

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveTable: Estimation results with de-factoredobservationsAsiaAfricaEurope Americaln yit0.4710 -0.0929 0.3792 0.1248t-statistics 3.2219 -0.7118 4.2687 2.2029p(N)-value 0.0006 0.2383 0.0000 0.0138 (ln yit )24.0910 2.0049 3.5555 0.8487t-statistics 2.8952 1.8021 1.7245 1.0995p(N)-value 0.0019 0.0358 0.0423 0.1358R2Adj R 2ab0.0312 0.0071 0.0405 0.00690.0281 0.0033 0.0365 0.0048EKC equation includes fixed effects. implies rejection of the null hypothesis at5%.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveThe outcomes of this research show when the authors controlfor the cross-sectional dependency of EKC curves in the fourregions, the relationship between CO2 and income stillmaintains an inverted U-shaped curve in the American, Asian,and European regions, but not in Africa.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an

CO2 environmental Kurzets curveEmpirical resultsThe results of EKCde-factor EKC curveThe results of de-factor EKC curves demonstrates aftercontrolling for cross-sectional correlations in CO2 emissionscaused by Carbon leakage, and in GDP per capita caused bythe international division of labor. These outcomes display thatunder the premise that greenhouse gasses are inferior goods,pursuing growth in per capita GDP, thereby increasingproduction in all industries in a country, will be accompanied byan increase in CO2 emissions.Chien-Ho Wang; Chang-Ching Lin; Wan-Jiun Chen; Chia-HsiangFactHsu or Fiction: The Relationship between Carbon Linkage an