Testing the Carbon Hysteresis Hypothesis in Azerbaijan: Evidence from Nonlinear Unit Root Tests

Zuleykha Javanshirova (), Farhad Mirzayev (), Sakina Babashova (), Narmin Guliyeva () and Namig Bakhishov ()
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Zuleykha Javanshirova: Department of Economic Cybernetics, Baku State University, Baku, Azerbaijan.
Farhad Mirzayev: Department of Economic Cybernetics, Baku State University, Baku, Azerbaijan.
Sakina Babashova: School of Master's Studies, Department of Economic And Technological Sciences, Azerbaijan State University of Economics, Abbas Sahhat 45A, Nasimi, Baku AZ1007, Azerbaijan.
Narmin Guliyeva: Department of Economic Cybernetics, Baku State University, Baku, Azerbaijan.
Namig Bakhishov: Department of Economic Cybernetics, Baku State University, Baku, Azerbaijan.

International Journal of Energy Economics and Policy, 2026, vol. 16, issue 2, 161-167

Abstract: This study investigates the validity of the Carbon Hysteresis Hypothesis (CHH) in Azerbaijan by employing advanced nonlinear time-series econometric techniques. Using annual CO? emissions data from 1901 to 2022, sourced from the Global Carbon Project and Our World in Data, the analysis begins with Harvey (2007) and Harvey et al. (2008) linearity pre-tests, which confirm the nonlinear nature of the emissions series. This finding justifies the application of nonlinear unit root tests-Kapetanios, Shin, and Snell (KSS, 2003), Sollis (2009), and Kruse (2011)-over conventional linear approaches such as ADF(1981), PP(1989), and KPSS(1992). The empirical results consistently fail to reject the null hypothesis of a unit root across both symmetric and asymmetric specifications, indicating that Azerbaijan's CO? emissions follow a non-stationary process and that carbon hysteresis is present. This persistence suggests that shocks-whether from economic expansion, external crises, or policy interventions-have permanent effects on emissions levels. The study aligns with existing evidence from other oil-exporting economies and highlights the structural challenges of decarbonization in hydrocarbon-dependent contexts. Based on these findings, the paper proposes a set of policy recommendations aimed at long-term decarbonization, renewable energy integration, industrial modernization, and regulatory strengthening, contributing to both the empirical literature on carbon hysteresis and the design of sustainable climate policies.

Keywords: Carbon Hysteresis Hypothesis; Nonlinear Unit Root Tests; CO? Emissions; Azerbaijan; Environmental Policy (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:v:16:y:2026:i:2:id:22493

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DOI: 10.32479/ijeep.22493

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