An Examination of Greenhouse Gas Convergence in OECD Countries

Global warming has become one of the most critical factors affecting the world, especially in the last decade. Therefore, it is of great importance to analyze the impact of global warming and take measures. The main factor leading to global warming is considered to be people’s consumption and production behaviors. The primary indicator of this is greenhouse gases. Relevant policy changes need to be made to control greenhouse gases. In this context, it is necessary to determine the differences in greenhouse gas emissions at the national level. To identify these differences, this study applies the convergence hypothesis, which has been the subject of numerous researchers since the 1980s. In this study, we analyzed the greenhouse gas intensity convergence for countries in the Organization for Economic Cooperation and Development (OECD) using linear and nonlinear panel unit root tests. The results of this study show that the greenhouse gas emissions in the OECD countries do not converge to the OECD average.


Introduction
Today, global warming is one of the significant problems that affect the world and is projected to increase its impact in the upcoming years. The main factor leading to global warming is considered to be people's consumption and production behaviors. The primary indicator of this is greenhouses gases. Relevant policy changes need to be made in order to control greenhouse gases. Global warming and the resulting carbon emissions have become one of the most controversial topics in the world. Tremendous efforts are spent on increasing environmental awareness, especially since the 1970s, and reducing greenhouse gas emissions has become the very first priority of international meetings. Global politics and global economic interests stand as essential obstacles to getting concrete results from these efforts.
The OECD countries generate a significant portion of the greenhouse gas emissions in the world. The consequences of the policies that these countries currently implement regarding production and consumption patterns will have a substantial impact on how global warming will take shape in the future. Figure 1 presents the percent change in total greenhouse gas emissions since 1990 in the OECD countries and the world.
This study aims to analyze whether there is a convergence between the OECD countries regarding greenhouse gas emissions using linear and nonlinear time series and panel unit root tests. The convergence hypothesis, which has been the subject of many studies since the 1980s, is one of the necessary inferences of the neoclassical growth theory and suggests that the relatively developing countries would converge with the more prosperous countries by eliminating income differences in general terms. The theory of convergence has become a controversial issue that attracts the attention of economists since it was first introduced. Studies investigated how these current differences of countries, regions, or international organizations with different natural resource distribution and different income levels will continue. In other words, the issue of how the inequalities between economies will change constitutes the basis of convergence discussions.
Convergence is an attractive concept used in areas such as economic growth, finance, theoretical econometrics, European political and monetary union, regional planning as well as geography, entertainment, multimedia technology, and the software industry. The fact that the countries do not converge to the country group indicates that the applied policies differ. From this point of view, it possible to ensure that the country for which convergence findings cannot be obtained converges to the group of the country with a policy change. The convergence hypothesis can be empirically investigated using unit root tests. The rejection of the unit root hypothesis indicates the existence of convergence. Unlike many of the other studies which use linear methods, this study uses the tests that focus on nonlinearity recently introduced in literature and frequently seen in economic structures.
The article is organized as follows. The next section presents the literature review. Econometric methods are introduced in section three. Section four provides the data and empirical findings used in the study, and conclusions and suggestions for further research are covered in section five.

Literature Review
El-Montassera et al. [ [4] used the data for per capita carbon dioxide emissions relative to the average per capita emissions for 21 OECD countries covering the period 1960-2000. Empirical findings obtained from this paper provide evidence that relative per capita carbon dioxide emissions in OECD countries are a mixture of I(0) and I(1) processes, in which 14 out of 21 OECD countries exhibited divergence.
Barassi et al. [5] investigated the convergence of per capita carbon dioxide emissions in OECD countries for the period 1950-2002. This paper employed stationarity and unit root tests, including those that allow for cross-sectional dependencies within the panel. The results indicated that carbon dioxide emissions did not converge among OECD countries during the period under consideration.
Barassi et al. [6] examined the convergence of carbon dioxide emissions within the OECD over the period 1870-2004. Their results suggest that carbon dioxide emissions within 13 out of 18 OECD countries are fractionally integrated, implying that they converge over time.
Panopoulou and Pantelidis [7] examined convergence in carbon dioxide emissions among 128 countries for the period 1960-2003 utilizing a new methodology.
Their results suggest convergence in per capita CO 2 emissions among all the countries in the early years of the sample period. Li and Lin [8] examined the topic (CO 2 emissions) for 110 countries over the period 1971-2008. Their results showed that there was convergence within subgroups of countries with similar income levels, but no overall convergence was achieved.
This study is different from other studies in the sense that we use an empirical methodology and both linear and nonlinear panel unit tests, which have been recently introduced in the literature.

Econometric Methods
The econometric method used in the empirical part of the study is the linear and liable results when the series to be employed in the analysis and the panel exhibit a nonlinear structure. In this context, Ucar and Omay [9] and Emirmahmutoğlu and Omay [10] tests are introduced.
Ucar and Omay [9] propose the unit root test for nonlinear heterogeneous panels by using the nonlinear time series framework Kapetanios, Shin, and Snell [12] test and the panel unit root testing framework of Im, Pesaran, and Shin [13] test.   [16], which allows for symmetric or asymmetric nonlinear adjustment under the alternative hypothesis to a unit root [17].
The unit root test by Kapetanios et al. [12] only assumes symmetric mean reversion behavior, but the unit root test by Sollis [16] takes into account asymmetric behavior. Sollis [16] can be extended to nonlinear asymmetric heterogeneous panels as follows: In this case, the deviation is the negative of the state variable, the outer regime is The augmented auxiliary equation is obtained as

Data and Empirical Results
The convergence of the intensity and the components of the greenhouse gas   Table 1 and Table 2, respectively.
The validity of the greenhouse gas convergence in Table 1 was investigated applying the tests by Maddala et al. [19], Harris and Tzavallis [20], Breitung [21], Im et al. [22] and Pesaran [13]. According to findings, the null hypothesis of a unit root was not rejected in all unit root tests for per capita methane gas, and stationarity null hypothesis was rejected in the Hadri stationarity test [23]. According to these results, per capita, methane gas convergence in OECD countries does not converge. For the nitrous gas per person, only the null hypothesis of a unit root was rejected in the Choi [24] test, and no stationarity was detected in cases other than this test. The unit root test hypothesis was rejected for CO 2 gas per capita according to the results of Levin et al. [25], Im et al. [22], and Choi [24] tests. In other words, per capita, CO 2 gas convergence is applied in OECD countries. In the last column, the analysis results for total greenhouse gas per capita were given. According to this, Levin et al. [25] and Choi [24] tests showed that per capita greenhouse convergence was valid, while the other six tests were the opposite. In general, it is concluded that convergence is not the case mostly by looking at the results of per capita greenhouse gas linear panel unit root tests in the OECD countries.
In Table 2

Conclusions
Global warming is on the rise in the world and is expected to have more impact in the upcoming years. Different measures have been taken in recent years to control global warming. In this context, the convergence of greenhouse gas, which is regarded as the core indicator of global warming, for OECD countries is necessary to guide policy makers.
The convergence analysis has been carried out in recent years using linear and nonlinear panel unit root tests in the literature. The conclusion is that the convergence of per capita greenhouse gas emissions in OECD countries is not valid.
The findings indicate that the long-term greenhouse gas emissions in the OECD countries will not be close to the same long-term values. According to these results, the differences in the long-term greenhouse gas emissions in the OECD countries will not disappear. Various policy changes need to be made in order to take these gases under control.
Future studies can focus on a similar analysis for country groups. Different results could be obtained from homogenous country groups.