Do Global CO2 Emissions from Fuel Consumption Exhibit Long Memory? A Fractional Integration Analysis

José Belbute
Authors registered in the RePEc Author Service: Alfredo Marvao Pereira

CEFAGE-UE Working Papers from University of Evora, CEFAGE-UE (Portugal)

Abstract: In this paper we use an ARFIMA approach to measure the degree of fractional integration of aggregate world CO2 emissions and its five components – coal, oil, gas, cement, and gas flaring. We find that all variables are stationary and mean reverting, but exhibit long-term memory. With aggregate CO2 emissions as a reference, our results suggest that both coal and oil combustion emissions have the weakest degree of long-range dependence, while emissions from gas, and gas flaring have the strongest. With evidence of long memory, we conclude that transitory policy shocks are likely to have long-lasting effects. Although the effects of any active policy on CO2 emissions take longer to disappear, they preserve their temporary nature. Accordingly, permanent effects on CO2 emissions require a more permanent policy stance. In this context, if one were to rely only on testing for stationarity and non-stationarity, one would likely conclude in favor of non-stationarity, and therefore that even transitory policy shocks have permanent effects. Our fractional integration analysis highlights that this is not the case.

Keywords: CO2 emissions; Long memory; ARFIMA model. (search for similar items in EconPapers)
JEL-codes: C22 O13 Q41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cfe:wpcefa:2015_14

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