Convergence of per capita energy consumption around the world: New evidence from nonlinear panel unit root tests

• Published in: Energy economics Vol. 111; p. 106062
• Main Authors: Romero-Ávila, Diego, Omay, Tolga
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.07.2022
• Subjects: 2030 Agenda for Sustainable Development; AESTAR process; Energy consumption convergence; ESTAR process; LSTR process; Nonlinearities; Panel unit root tests; Sign nonlinearity; Size nonlinearity; State-dependence; Structural breaks; Time-dependence; 2030 Agenda for Sustainable Development; C33; State-dependence; C24; Size nonlinearity; Sign nonlinearity; AESTAR process; Q50; Nonlinearities; LSTR process; Time-dependence; Structural breaks; Panel unit root tests; Q43; Q54; Energy consumption convergence; Q58; ESTAR process
• ISSN: 0140-9883
• DOI: 10.1016/j.eneco.2022.106062

This paper investigates the existence of stochastic and deterministic convergence in per capita energy consumption among the countries forming four income-level groups and a full sample of 110 countries over the 1971–2019 period. For that purpose, we employ six state-of-the-art nonlinear panel unit root tests with nonlinear dynamics that range from state-dependent nonlinearities such as ESTAR, AESTAR and TAR dynamics to time-dependent nonlinearities of structural break form. We find consistent evidence supporting stochastic convergence among high-income and upper-middle-income countries according to two of the six panel tests. Concerning the stronger notion of deterministic convergence, three tests point to deterministic convergence among high-income countries, and only one supports this hypothesis among upper-middle-income countries. Lack of convergence across all country groups carries important policy implications concerning the achievement of SDG7 of the global 2030 Agenda for Sustainable Development that affects every single country in the planet. •This paper investigates stochastic and deterministic convergence in per capita energy consumption around the world.•We employ six state-of-the-art nonlinear panel unit root tests with nonlinear dynamics.•They range from state-dependent nonlinearities to time-dependent nonlinearities of structural break form.•Two tests support stochastic convergence among high-income and upper-middle-income countries.•Three tests point to deterministic convergence among high-income countries, and only one among upper-middle-income countries.