The impact of oil prices on CO2 emissions in China: A Wavelet coherence approach

Faik Bilgili, Erhan Mugaloglu and Emrah Koçak

MPRA Paper from University Library of Munich, Germany

Abstract: This paper observes the possible co-movements of oil price and CO2 emissions in China by following wavelet coherence and wavelet partial coherence analyses to be able to depict short-run and long-run co-movements at both low and high frequencies. To this end, this research might provide the current literature with the output of potential short run and long run, structural, changes in CO2 emissions upon a shock (a change) in oil prices in China together with the control variables of World oil prices, fossil energy consumption, and renewables consumption, and, urban population in China. Therefore, this research aims at determining wavelet coherencies between the variables and phase differences to exhibit the leading variable in potential co-movements. By following the time domain and frequency domain analyses of this research, one may claim that the oil prices in China has considerable negative impact on CO2 emissions at high frequencies for the periods 1960-2014 and 1971-2014 in China. Besides, one may underline as well other important output of the research exploring that the urban population and CO2 emissions have positive associations, move together for the period 1960-2014 in China. Eventually, this paper might suggest that authorities follow demand side management policies considering energy demand behavior at both shorter cycles and longer cycles to diminish the CO2 emissions in China.

Keywords: Wavelet coherence; wavelet partial coherence; oil price; CO2 emissions; urbanization; China (search for similar items in EconPapers)
JEL-codes: C1 C32 C49 C61 C63 E32 E37 I0 J11 J18 Q2 Q21 Q31 Q32 Q40 Q52 Q53 Q56 Q57 R0 (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env, nep-mac and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90170

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