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

Bilgili, Faik and Mugaloglu, Erhan and Koçak, Emrah (2018): The impact of oil prices on CO2 emissions in China: A Wavelet coherence approach.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Wavelet coherence, wavelet partial coherence, oil price, CO2 emissions, urbanization, China
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C49 - Other; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and Applications; I - Health, Education, and Welfare > I0 - General; J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends, Macroeconomic Effects, and Forecasts; J - Labor and Demographic Economics > J1 - Demographic Economics > J18 - Public Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q21 - Demand and Supply ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q31 - Demand and Supply ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q32 - Exhaustible Resources and Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q40 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q57 - Ecological Economics: Ecosystem Services ; Biodiversity Conservation ; Bioeconomics ; Industrial Ecology; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R0 - General

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