Club Convergence and Clustering of U.S. Energy-Related CO2 Emissions

This study examines the convergence of energy-related carbon dioxide emissions among a panel of U.S. states between the period 1960-2009. This examination is carried out by means of a two-stage procedure. In the first stage, we conduct a novel regression-based convergence test. Unlike previous studies, this methodology endogenously identifies groups of states with emissions that are converging to a similar steady state growth path over time. In the second stage, we evaluate the rate of convergence (beta-convergence) for the whole sample and for each club based on a panel data, fixed effects model which controls for unobserved, time-invariant heterogeneous effects. More specifically, we examine how structural and non-structural variables affect the rates of convergence. Results from stage one and stage two suggest that two groups of states are converging to similar, relative growth paths: a high-emitting group and a medium-emitting group. Finally, we discuss a differentiated policy approach to mitigating carbon dioxide emissions based on the club convergence hypothesis.

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Conference Paper/ Presentation
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JEL Codes:
C23; Q47; Q48; Q54

 Record created 2017-04-01, last modified 2018-01-22

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