Convergence of CO2 emissions among the selected countries on the Silk Road: evidence from nonlinear panel unit root tests

This study analyzes the convergence of carbon dioxide (CO2) emissions by examining the stationarity of the relative per capita CO2 emissions of 18 selected countries on the Silk Road for the period 1990–2020. To examine the stationarity of relative per capita CO2 emissions for those 18 countries, we applied a large battery the newly proposed nonlinear panel unit root tests that allow for several forms of state-dependent and time-dependent nonlinearities. We also applied conventional linear panel unit root tests. The linear and nonlinear panel unit root tests account for cross-country dependencies, and the SPSM procedure is applied to these tests in order to see how many countries in the panel sample are converging to the steady state. The test results of linear and nonlinear panel unit root test reveal that the relative per-capita CO2 emissions of 10 out of 18 countries are stationary meaning that the CO2 emissions of these 10 countries converge to the steady-state level over time. Especially, size and sign nonlinearities better capture the convergence dynamics of per capita CO2 emissions towards the steady-state level for seven countries. As we have found that 56% of countries’ per capita CO2 emissions are converging, this result has important policy implications.